Correlation Between ChampionX and Luxfer Holdings

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

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

Diversification Opportunities for ChampionX and Luxfer Holdings

-0.03

Correlation Coefficient

ChampionX  Luxfer Holdings

Good diversification

The 3 months correlation between ChampionX and Luxfer is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Luxfer Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luxfer Holdings PLC 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 Luxfer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luxfer Holdings PLC has no effect on the direction of ChampionX i.e., ChampionX and Luxfer Holdings go up and down completely randomly.

Pair Corralation between ChampionX and Luxfer Holdings

Considering the 90-day investment horizon ChampionX is expected to generate 3.45 times less return on investment than Luxfer Holdings. But when comparing it to its historical volatility, ChampionX is 1.23 times less risky than Luxfer Holdings. It trades about 0.01 of its potential returns per unit of risk. Luxfer Holdings PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,291  in Luxfer Holdings PLC on September 23, 2024 and sell it today you would earn a total of  27.00  from holding Luxfer Holdings PLC or generate 2.09% return on investment over 90 days.

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

ChampionX  vs.  Luxfer Holdings PLC

ChampionX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChampionX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Luxfer Holdings PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, Luxfer Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ChampionX and Luxfer Holdings

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

The idea behind ChampionX and Luxfer Holdings PLC 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.