Correlation Between Crowdstrike Holdings and WuXi AppTec

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

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

Diversification Opportunities for Crowdstrike Holdings and WuXi AppTec

0.12

Correlation Coefficient

Crowdstrike Holdings  WuXi AppTec

Average diversification

The 3 months correlation between Crowdstrike and WuXi is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Crowdstrike Holdings and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec 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 WuXi AppTec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi AppTec has no effect on the direction of Crowdstrike Holdings i.e., Crowdstrike Holdings and WuXi AppTec go up and down completely randomly.

Pair Corralation between Crowdstrike Holdings and WuXi AppTec

Given the investment horizon of 90 days Crowdstrike Holdings is expected to generate 1.91 times less return on investment than WuXi AppTec. In addition to that, Crowdstrike Holdings is 1.48 times more volatile than WuXi AppTec Co. It trades about 0.03 of its total potential returns per unit of risk. WuXi AppTec Co is currently generating about 0.08 per unit of volatility. If you would invest  715.00  in WuXi AppTec Co on December 21, 2024 and sell it today you would earn a total of  66.00  from holding WuXi AppTec Co or generate 9.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Crowdstrike Holdings  vs.  WuXi AppTec Co

Crowdstrike Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crowdstrike Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Crowdstrike Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

WuXi AppTec

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WuXi AppTec Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, WuXi AppTec may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Crowdstrike Holdings and WuXi AppTec

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

The idea behind Crowdstrike Holdings and WuXi AppTec Co 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.