Correlation Between CrowdStrike Holdings and Altair Engineering

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

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

Diversification Opportunities for CrowdStrike Holdings and Altair Engineering

0.52

Correlation Coefficient

CrowdStrike Holdings  Altair Engineering

Very weak diversification

The 3 months correlation between CrowdStrike and Altair is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CrowdStrike Holdings and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering 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 Altair Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altair Engineering has no effect on the direction of CrowdStrike Holdings i.e., CrowdStrike Holdings and Altair Engineering go up and down completely randomly.

Pair Corralation between CrowdStrike Holdings and Altair Engineering

Assuming the 90 days horizon CrowdStrike Holdings is expected to generate 5.07 times more return on investment than Altair Engineering. However, CrowdStrike Holdings is 5.07 times more volatile than Altair Engineering. It trades about 0.0 of its potential returns per unit of risk. Altair Engineering is currently generating about -0.02 per unit of risk. If you would invest  33,935  in CrowdStrike Holdings on December 30, 2024 and sell it today you would lose (1,225) from holding CrowdStrike Holdings or give up 3.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

CrowdStrike Holdings  vs.  Altair Engineering

CrowdStrike Holdings

Risk-Adjusted Performance

Very Weak

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

Altair Engineering

Risk-Adjusted Performance

Very Weak

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

Pair Trading with CrowdStrike Holdings and Altair Engineering

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

The idea behind CrowdStrike Holdings and Altair Engineering 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..