Correlation Between Cytek Biosciences and ReShape Lifesciences

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

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

Diversification Opportunities for Cytek Biosciences and ReShape Lifesciences

0.77

Correlation Coefficient

Cytek Biosciences  ReShape Lifesciences

Poor diversification

The 3 months correlation between Cytek and ReShape is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cytek Biosciences and ReShape Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReShape Lifesciences and Cytek Biosciences 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 Cytek Biosciences 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 Cytek Biosciences i.e., Cytek Biosciences and ReShape Lifesciences go up and down completely randomly.

Pair Corralation between Cytek Biosciences and ReShape Lifesciences

Given the investment horizon of 90 days Cytek Biosciences is expected to generate 0.43 times more return on investment than ReShape Lifesciences. However, Cytek Biosciences is 2.33 times less risky than ReShape Lifesciences. It trades about -0.08 of its potential returns per unit of risk. ReShape Lifesciences is currently generating about -0.21 per unit of risk. If you would invest  653.00  in Cytek Biosciences on November 28, 2024 and sell it today you would lose (140.00) from holding Cytek Biosciences or give up 21.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.67%
Values	Daily Returns

Cytek Biosciences  vs.  ReShape Lifesciences

Cytek Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cytek Biosciences 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 forward-looking signals remain somewhat 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.

ReShape Lifesciences

Risk-Adjusted Performance

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 March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cytek Biosciences and ReShape Lifesciences

The main advantage of trading using opposite Cytek Biosciences and ReShape Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cytek Biosciences 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 Cytek Biosciences 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.