Correlation Between Tilray and Shuttle Pharmaceuticals

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

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

Diversification Opportunities for Tilray and Shuttle Pharmaceuticals

0.59

Correlation Coefficient

Tilray  Shuttle Pharmaceuticals

Very weak diversification

The 3 months correlation between Tilray and Shuttle is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tilray Inc and Shuttle Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shuttle Pharmaceuticals and Tilray 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 Tilray Inc are associated (or correlated) with Shuttle Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shuttle Pharmaceuticals has no effect on the direction of Tilray i.e., Tilray and Shuttle Pharmaceuticals go up and down completely randomly.

Pair Corralation between Tilray and Shuttle Pharmaceuticals

Given the investment horizon of 90 days Tilray Inc is expected to under-perform the Shuttle Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Tilray Inc is 1.15 times less risky than Shuttle Pharmaceuticals. The stock trades about -0.16 of its potential returns per unit of risk. The Shuttle Pharmaceuticals is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  85.00  in Shuttle Pharmaceuticals on November 28, 2024 and sell it today you would lose (25.00) from holding Shuttle Pharmaceuticals or give up 29.41% of portfolio value over 90 days.

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

Tilray Inc  vs.  Shuttle Pharmaceuticals

Tilray Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tilray Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Shuttle Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shuttle Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Tilray and Shuttle Pharmaceuticals

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

The idea behind Tilray Inc and Shuttle Pharmaceuticals 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.