Correlation Between Amazon and ChampionX

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Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and ChampionX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and ChampionX, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and ChampionX.

Diversification Opportunities for Amazon and ChampionX

-0.81
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Amazon and ChampionX is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and ChampionX go up and down completely randomly.

Pair Corralation between Amazon and ChampionX

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the ChampionX. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 1.35 times less risky than ChampionX. The stock trades about -0.03 of its potential returns per unit of risk. The ChampionX is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,372  in ChampionX on September 2, 2022 and sell it today you would earn a total of  1,708  from holding ChampionX or generate 124.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  ChampionX

 Performance (%) 
       Timeline  
Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

ChampionX 
ChampionX Performance
0 of 100
Over the last 90 days ChampionX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

ChampionX Price Channel

Amazon and ChampionX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and ChampionX

The main advantage of trading using opposite Amazon and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.
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The idea behind Amazon Inc 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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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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