Correlation Between CrowdStrike Holdings and STMicroelectronics

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

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

Diversification Opportunities for CrowdStrike Holdings and STMicroelectronics

0.53

Correlation Coefficient

CrowdStrike Holdings  STMicroelectronics

Very weak diversification

The 3 months correlation between CrowdStrike and STMicroelectronics is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CrowdStrike Holdings and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics 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 STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of CrowdStrike Holdings i.e., CrowdStrike Holdings and STMicroelectronics go up and down completely randomly.

Pair Corralation between CrowdStrike Holdings and STMicroelectronics

Assuming the 90 days horizon CrowdStrike Holdings is expected to generate 0.62 times more return on investment than STMicroelectronics. However, CrowdStrike Holdings is 1.61 times less risky than STMicroelectronics. It trades about -0.02 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.01 per unit of risk. If you would invest  38,975  in CrowdStrike Holdings on May 14, 2025 and sell it today you would lose (1,735) from holding CrowdStrike Holdings or give up 4.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

CrowdStrike Holdings  vs.  STMicroelectronics NV

CrowdStrike Holdings

Risk-Adjusted Performance

Weakest

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.

STMicroelectronics

Risk-Adjusted Performance

Weakest

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

Pair Trading with CrowdStrike Holdings and STMicroelectronics

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

The idea behind CrowdStrike Holdings and STMicroelectronics NV 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.