Correlation Between ChampionX and Kinsale Capital

Can any of the company-specific risk be diversified away by investing in both ChampionX and Kinsale Capital 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 Kinsale Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ChampionX and Kinsale Capital Group, you can compare the effects of market volatilities on ChampionX and Kinsale Capital 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 Kinsale Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChampionX and Kinsale Capital.

Diversification Opportunities for ChampionX and Kinsale Capital

0.02

Correlation Coefficient

ChampionX  Kinsale Capital

Significant diversification

The 3 months correlation between ChampionX and Kinsale is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Kinsale Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinsale Capital Group 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 Kinsale Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinsale Capital Group has no effect on the direction of ChampionX i.e., ChampionX and Kinsale Capital go up and down completely randomly.

Pair Corralation between ChampionX and Kinsale Capital

Considering the 90-day investment horizon ChampionX is expected to generate 0.96 times more return on investment than Kinsale Capital. However, ChampionX is 1.05 times less risky than Kinsale Capital. It trades about 0.11 of its potential returns per unit of risk. Kinsale Capital Group is currently generating about 0.04 per unit of risk. If you would invest  2,661  in ChampionX on December 30, 2024 and sell it today you would earn a total of  326.00  from holding ChampionX or generate 12.25% return on investment over 90 days.

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

ChampionX  vs.  Kinsale Capital Group

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.

Kinsale Capital Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kinsale Capital Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Kinsale Capital is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ChampionX and Kinsale Capital

The main advantage of trading using opposite ChampionX and Kinsale Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChampionX position performs unexpectedly, Kinsale Capital 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 Kinsale Capital will offset losses from the drop in Kinsale Capital's long position.

The idea behind ChampionX and Kinsale Capital Group 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..