Correlation Between ChampionX and BORR DRILLING

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

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

Diversification Opportunities for ChampionX and BORR DRILLING

-0.14

Correlation Coefficient

ChampionX  BORR DRILLING

Good diversification

The 3 months correlation between ChampionX and BORR is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and BORR DRILLING NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORR DRILLING NEW 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 BORR DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORR DRILLING NEW has no effect on the direction of ChampionX i.e., ChampionX and BORR DRILLING go up and down completely randomly.

Pair Corralation between ChampionX and BORR DRILLING

Assuming the 90 days horizon ChampionX is expected to generate 0.54 times more return on investment than BORR DRILLING. However, ChampionX is 1.85 times less risky than BORR DRILLING. It trades about 0.07 of its potential returns per unit of risk. BORR DRILLING NEW is currently generating about -0.05 per unit of risk. If you would invest  2,650  in ChampionX on October 26, 2024 and sell it today you would earn a total of  210.00  from holding ChampionX or generate 7.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

ChampionX  vs.  BORR DRILLING NEW

ChampionX

Risk-Adjusted Performance

5 of 100

Modest

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

BORR DRILLING NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BORR DRILLING NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ChampionX and BORR DRILLING

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

The idea behind ChampionX and BORR DRILLING NEW 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.