Correlation Between Melco Resorts and CRISPR Therapeutics

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

By analyzing existing cross correlation between Melco Resorts Entertainment and CRISPR Therapeutics AG, you can compare the effects of market volatilities on Melco Resorts and CRISPR Therapeutics 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 Melco Resorts with a short position of CRISPR Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melco Resorts and CRISPR Therapeutics.

Diversification Opportunities for Melco Resorts and CRISPR Therapeutics

0.6

Correlation Coefficient

Melco Resorts  CRISPR Therapeutics

Poor diversification

The 3 months correlation between Melco and CRISPR is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Melco Resorts Entertainment and CRISPR Therapeutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRISPR Therapeutics and Melco Resorts 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 Melco Resorts Entertainment are associated (or correlated) with CRISPR Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRISPR Therapeutics has no effect on the direction of Melco Resorts i.e., Melco Resorts and CRISPR Therapeutics go up and down completely randomly.

Pair Corralation between Melco Resorts and CRISPR Therapeutics

Assuming the 90 days trading horizon Melco Resorts is expected to generate 1.84 times less return on investment than CRISPR Therapeutics. But when comparing it to its historical volatility, Melco Resorts Entertainment is 1.5 times less risky than CRISPR Therapeutics. It trades about 0.17 of its potential returns per unit of risk. CRISPR Therapeutics AG is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,751  in CRISPR Therapeutics AG on April 25, 2025 and sell it today you would earn a total of  1,849  from holding CRISPR Therapeutics AG or generate 67.21% return on investment over 90 days.

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

Melco Resorts Entertainment  vs.  CRISPR Therapeutics AG

Melco Resorts Entert

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Melco Resorts Entertainment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Melco Resorts sustained solid returns over the last few months and may actually be approaching a breakup point.

CRISPR Therapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CRISPR Therapeutics AG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CRISPR Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Melco Resorts and CRISPR Therapeutics

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

The idea behind Melco Resorts Entertainment and CRISPR Therapeutics AG 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.