Correlation Between Cytek Biosciences and Venus Concept

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

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

Diversification Opportunities for Cytek Biosciences and Venus Concept

0.7

Correlation Coefficient

Cytek Biosciences  Venus Concept

Poor diversification

The 3 months correlation between Cytek and Venus is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cytek Biosciences and Venus Concept in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Venus Concept 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 Venus Concept. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Venus Concept has no effect on the direction of Cytek Biosciences i.e., Cytek Biosciences and Venus Concept go up and down completely randomly.

Pair Corralation between Cytek Biosciences and Venus Concept

Given the investment horizon of 90 days Cytek Biosciences is expected to under-perform the Venus Concept. But the stock apears to be less risky and, when comparing its historical volatility, Cytek Biosciences is 3.15 times less risky than Venus Concept. The stock trades about -0.17 of its potential returns per unit of risk. The Venus Concept is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  396.00  in Venus Concept on December 28, 2024 and sell it today you would lose (117.00) from holding Venus Concept or give up 29.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Cytek Biosciences  vs.  Venus Concept

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Venus Concept

Risk-Adjusted Performance

Weak

Over the last 90 days Venus Concept has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, Venus Concept may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cytek Biosciences and Venus Concept

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

The idea behind Cytek Biosciences and Venus Concept 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.