Correlation Between Schlumberger and ChampionX

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

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

Diversification Opportunities for Schlumberger and ChampionX

0.94

Correlation Coefficient

Schlumberger  ChampionX

Almost no diversification

The 3 months correlation between Schlumberger and ChampionX is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Schlumberger Limited and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and Schlumberger 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 Schlumberger Limited 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 Schlumberger i.e., Schlumberger and ChampionX go up and down completely randomly.

Pair Corralation between Schlumberger and ChampionX

Assuming the 90 days horizon Schlumberger Limited is expected to generate 1.06 times more return on investment than ChampionX. However, Schlumberger is 1.06 times more volatile than ChampionX. It trades about 0.07 of its potential returns per unit of risk. ChampionX is currently generating about 0.06 per unit of risk. If you would invest  3,606  in Schlumberger Limited on September 12, 2024 and sell it today you would earn a total of  329.00  from holding Schlumberger Limited or generate 9.12% return on investment over 90 days.

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

Schlumberger Limited  vs.  ChampionX

Schlumberger Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Schlumberger Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Schlumberger may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ChampionX

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ChampionX are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ChampionX may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Schlumberger and ChampionX

The main advantage of trading using opposite Schlumberger and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schlumberger 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 Schlumberger Limited 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.