Correlation Between ChampionX and Schlumberger

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

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

Diversification Opportunities for ChampionX and Schlumberger

0.94

Correlation Coefficient

ChampionX  Schlumberger

Almost no diversification

The 3 months correlation between ChampionX and Schlumberger is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Schlumberger Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger Limited 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 Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger Limited has no effect on the direction of ChampionX i.e., ChampionX and Schlumberger go up and down completely randomly.

Pair Corralation between ChampionX and Schlumberger

Assuming the 90 days horizon ChampionX is expected to under-perform the Schlumberger. But the stock apears to be less risky and, when comparing its historical volatility, ChampionX is 1.06 times less risky than Schlumberger. The stock trades about -0.07 of its potential returns per unit of risk. The Schlumberger Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,785  in Schlumberger Limited on September 25, 2024 and sell it today you would lose (255.00) from holding Schlumberger Limited or give up 6.74% of portfolio value over 90 days.

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

ChampionX  vs.  Schlumberger Limited

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Schlumberger Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schlumberger Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Schlumberger is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ChampionX and Schlumberger

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

The idea behind ChampionX and Schlumberger Limited 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.