Correlation Between Flotek Industries and Championx Corp

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

Diversification Opportunities for Flotek Industries and Championx Corp

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Flotek and Championx is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Flotek Industries and Championx Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Championx Corp and Flotek Industries 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 Flotek Industries are associated (or correlated) with Championx Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Championx Corp has no effect on the direction of Flotek Industries i.e., Flotek Industries and Championx Corp go up and down completely randomly.

Pair Corralation between Flotek Industries and Championx Corp

Considering the 90-day investment horizon Flotek Industries is expected to under-perform the Championx Corp. In addition to that, Flotek Industries is 1.72 times more volatile than Championx Corp. It trades about 0.0 of its total potential returns per unit of risk. Championx Corp is currently generating about 0.06 per unit of volatility. If you would invest  855.00  in Championx Corp on June 27, 2022 and sell it today you would earn a total of  1,044  from holding Championx Corp or generate 122.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Flotek Industries  vs.  Championx Corp

 Performance (%) 
       Timeline  
Flotek Industries 
Flotek Performance
0 of 100
Over the last 90 days Flotek Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Flotek Industries is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Flotek Price Channel

Championx Corp 
Championx Performance
0 of 100
Over the last 90 days Championx Corp 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

Flotek Industries and Championx Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Flotek Industries and Championx Corp

The main advantage of trading using opposite Flotek Industries and Championx Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flotek Industries position performs unexpectedly, Championx Corp 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 Corp will offset losses from the drop in Championx Corp's long position.
Flotek Industries vs. Industrias Bachoco SA
The idea behind Flotek Industries and Championx Corp 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.
Championx Corp vs. Industrias Bachoco SA
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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