Correlation Between ChampionX and Forum Energy

Can any of the company-specific risk be diversified away by investing in both ChampionX and Forum Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ChampionX and Forum Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ChampionX and Forum Energy Technologies, you can compare the effects of market volatilities on ChampionX and Forum Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ChampionX with a short position of Forum Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChampionX and Forum Energy.

Diversification Opportunities for ChampionX and Forum Energy

0.86

Correlation Coefficient

ChampionX  Forum Energy

Very poor diversification

The 3 months correlation between ChampionX and Forum is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Forum Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Energy Technologies and ChampionX is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ChampionX are associated (or correlated) with Forum Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Energy Technologies has no effect on the direction of ChampionX i.e., ChampionX and Forum Energy go up and down completely randomly.

Pair Corralation between ChampionX and Forum Energy

Considering the 90-day investment horizon ChampionX is expected to generate 2.6 times less return on investment than Forum Energy. But when comparing it to its historical volatility, ChampionX is 1.51 times less risky than Forum Energy. It trades about 0.11 of its potential returns per unit of risk. Forum Energy Technologies is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,515  in Forum Energy Technologies on December 29, 2024 and sell it today you would earn a total of  587.00  from holding Forum Energy Technologies or generate 38.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

ChampionX  vs.  Forum Energy Technologies

ChampionX

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ChampionX are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical indicators, ChampionX showed solid returns over the last few months and may actually be approaching a breakup point.

Forum Energy Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Forum Energy Technologies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Forum Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ChampionX and Forum Energy

The main advantage of trading using opposite ChampionX and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChampionX position performs unexpectedly, Forum Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Forum Energy will offset losses from the drop in Forum Energy's long position.

The idea behind ChampionX and Forum Energy Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.