Correlation Between Cresco Labs and Shionogi

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

By analyzing existing cross correlation between Cresco Labs and Shionogi Co, you can compare the effects of market volatilities on Cresco Labs and Shionogi 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 Cresco Labs with a short position of Shionogi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cresco Labs and Shionogi.

Diversification Opportunities for Cresco Labs and Shionogi

0.16

Correlation Coefficient

Cresco Labs  Shionogi

Average diversification

The 3 months correlation between Cresco and Shionogi is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cresco Labs and Shionogi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi and Cresco Labs 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 Cresco Labs are associated (or correlated) with Shionogi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shionogi has no effect on the direction of Cresco Labs i.e., Cresco Labs and Shionogi go up and down completely randomly.

Pair Corralation between Cresco Labs and Shionogi

Assuming the 90 days horizon Cresco Labs is expected to generate 4.34 times more return on investment than Shionogi. However, Cresco Labs is 4.34 times more volatile than Shionogi Co. It trades about 0.03 of its potential returns per unit of risk. Shionogi Co is currently generating about -0.26 per unit of risk. If you would invest  169.00  in Cresco Labs on March 14, 2024 and sell it today you would earn a total of  4.00  from holding Cresco Labs or generate 2.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cresco Labs  vs.  Shionogi Co

Cresco Labs

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cresco Labs are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Cresco Labs may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Shionogi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shionogi Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Cresco Labs and Shionogi

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

The idea behind Cresco Labs and Shionogi 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.