Correlation Between OCCIDENTAL and ChampionX

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

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

Diversification Opportunities for OCCIDENTAL and ChampionX

0.26

Correlation Coefficient

OCCIDENTAL  ChampionX

Modest diversification

The 3 months correlation between OCCIDENTAL and ChampionX is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding OCCIDENTAL PETE P and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and OCCIDENTAL 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 OCCIDENTAL PETE P 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 OCCIDENTAL i.e., OCCIDENTAL and ChampionX go up and down completely randomly.

Pair Corralation between OCCIDENTAL and ChampionX

Assuming the 90 days trading horizon OCCIDENTAL PETE P is expected to under-perform the ChampionX. But the bond apears to be less risky and, when comparing its historical volatility, OCCIDENTAL PETE P is 1.51 times less risky than ChampionX. The bond trades about -0.05 of its potential returns per unit of risk. The ChampionX is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,897  in ChampionX on September 15, 2024 and sell it today you would lose (48.00) from holding ChampionX or give up 1.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	81.25%
Values	Daily Returns

OCCIDENTAL PETE P  vs.  ChampionX

OCCIDENTAL PETE P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OCCIDENTAL PETE P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, OCCIDENTAL is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 fairly strong technical indicators, ChampionX is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with OCCIDENTAL and ChampionX

The main advantage of trading using opposite OCCIDENTAL and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OCCIDENTAL 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 OCCIDENTAL PETE P 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.