Correlation Between Diamyd Medical and CrowdStrike Holdings

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

By analyzing existing cross correlation between Diamyd Medical AB and CrowdStrike Holdings, you can compare the effects of market volatilities on Diamyd Medical and CrowdStrike Holdings 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 Diamyd Medical with a short position of CrowdStrike Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and CrowdStrike Holdings.

Diversification Opportunities for Diamyd Medical and CrowdStrike Holdings

-0.87

Correlation Coefficient

Diamyd Medical  CrowdStrike Holdings

Pay attention - limited upside

The 3 months correlation between Diamyd and CrowdStrike is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and CrowdStrike Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CrowdStrike Holdings and Diamyd Medical 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 Diamyd Medical AB are associated (or correlated) with CrowdStrike Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CrowdStrike Holdings has no effect on the direction of Diamyd Medical i.e., Diamyd Medical and CrowdStrike Holdings go up and down completely randomly.

Pair Corralation between Diamyd Medical and CrowdStrike Holdings

Assuming the 90 days horizon Diamyd Medical is expected to generate 2.33 times less return on investment than CrowdStrike Holdings. In addition to that, Diamyd Medical is 1.48 times more volatile than CrowdStrike Holdings. It trades about 0.09 of its total potential returns per unit of risk. CrowdStrike Holdings is currently generating about 0.31 per unit of volatility. If you would invest  27,545  in CrowdStrike Holdings on September 4, 2024 and sell it today you would earn a total of  5,955  from holding CrowdStrike Holdings or generate 21.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Diamyd Medical AB  vs.  CrowdStrike Holdings

Diamyd Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamyd Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CrowdStrike Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CrowdStrike Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CrowdStrike Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Diamyd Medical and CrowdStrike Holdings

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

The idea behind Diamyd Medical AB and CrowdStrike Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.