Correlation Between ProPetro Holding and ChampionX

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

By analyzing existing cross correlation between ProPetro Holding Corp and ChampionX, you can compare the effects of market volatilities on ProPetro Holding and ChampionX 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 ProPetro Holding with a short position of ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProPetro Holding and ChampionX.

Diversification Opportunities for ProPetro Holding and ChampionX

0.12

Correlation Coefficient

ProPetro Holding  ChampionX

Average diversification

The 3 months correlation between ProPetro and ChampionX is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ProPetro Holding Corp and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and ProPetro Holding 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 ProPetro Holding Corp are associated (or correlated) with ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of ProPetro Holding i.e., ProPetro Holding and ChampionX go up and down completely randomly.

Pair Corralation between ProPetro Holding and ChampionX

Given the investment horizon of 90 days ProPetro Holding Corp is expected to generate 1.45 times more return on investment than ChampionX. However, ProPetro Holding is 1.45 times more volatile than ChampionX. It trades about 0.01 of its potential returns per unit of risk. ChampionX is currently generating about 0.0 per unit of risk. If you would invest  1,037  in ProPetro Holding Corp on September 20, 2024 and sell it today you would lose (144.50) from holding ProPetro Holding Corp or give up 13.93% of portfolio value over 90 days.

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

ProPetro Holding Corp  vs.  ChampionX

ProPetro Holding Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProPetro Holding Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, ProPetro Holding reported solid returns over the last few months and may actually be approaching a breakup point.

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 unfluctuating 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.

Pair Trading with ProPetro Holding and ChampionX

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

The idea behind ProPetro Holding Corp and ChampionX 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.