Correlation Between Crowdstrike Holdings and GigaCloud Technology

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

Diversification Opportunities for Crowdstrike Holdings and GigaCloud Technology

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Crowdstrike and GigaCloud is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Crowdstrike Holdings and GigaCloud Technology Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaCloud Technology and Crowdstrike Holdings 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 Crowdstrike Holdings are associated (or correlated) with GigaCloud Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaCloud Technology has no effect on the direction of Crowdstrike Holdings i.e., Crowdstrike Holdings and GigaCloud Technology go up and down completely randomly.

Pair Corralation between Crowdstrike Holdings and GigaCloud Technology

Given the investment horizon of 90 days Crowdstrike Holdings is expected to generate 0.68 times more return on investment than GigaCloud Technology. However, Crowdstrike Holdings is 1.48 times less risky than GigaCloud Technology. It trades about 0.47 of its potential returns per unit of risk. GigaCloud Technology Class is currently generating about 0.06 per unit of risk. If you would invest  35,700  in Crowdstrike Holdings on November 18, 2024 and sell it today you would earn a total of  9,474  from holding Crowdstrike Holdings or generate 26.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Crowdstrike Holdings  vs.  GigaCloud Technology Class

 Performance 
       Timeline  
Crowdstrike Holdings 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Crowdstrike Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Crowdstrike Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.
GigaCloud Technology 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days GigaCloud Technology Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, GigaCloud Technology is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Crowdstrike Holdings and GigaCloud Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Crowdstrike Holdings and GigaCloud Technology

The main advantage of trading using opposite Crowdstrike Holdings and GigaCloud Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crowdstrike Holdings position performs unexpectedly, GigaCloud Technology 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 GigaCloud Technology will offset losses from the drop in GigaCloud Technology's long position.
The idea behind Crowdstrike Holdings and GigaCloud Technology Class 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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