Correlation Between Alphatec Holdings and ReShape Lifesciences

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

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

Diversification Opportunities for Alphatec Holdings and ReShape Lifesciences

-0.22

Correlation Coefficient

Alphatec Holdings  ReShape Lifesciences

Very good diversification

The 3 months correlation between Alphatec and ReShape is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Alphatec Holdings and ReShape Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReShape Lifesciences and Alphatec 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 Alphatec Holdings are associated (or correlated) with ReShape Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReShape Lifesciences has no effect on the direction of Alphatec Holdings i.e., Alphatec Holdings and ReShape Lifesciences go up and down completely randomly.

Pair Corralation between Alphatec Holdings and ReShape Lifesciences

Given the investment horizon of 90 days Alphatec Holdings is expected to generate 0.92 times more return on investment than ReShape Lifesciences. However, Alphatec Holdings is 1.09 times less risky than ReShape Lifesciences. It trades about 0.13 of its potential returns per unit of risk. ReShape Lifesciences is currently generating about -0.07 per unit of risk. If you would invest  690.00  in Alphatec Holdings on August 30, 2024 and sell it today you would earn a total of  347.00  from holding Alphatec Holdings or generate 50.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Alphatec Holdings  vs.  ReShape Lifesciences

Alphatec Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alphatec Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Alphatec Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

ReShape Lifesciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ReShape Lifesciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Alphatec Holdings and ReShape Lifesciences

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

The idea behind Alphatec Holdings and ReShape Lifesciences 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 Stocks Directory module to find actively traded stocks across global markets.