Correlation Between Profound Medical and Cytek Biosciences

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

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

Diversification Opportunities for Profound Medical and Cytek Biosciences

0.64

Correlation Coefficient

Profound Medical  Cytek Biosciences

Poor diversification

The 3 months correlation between Profound and Cytek is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Profound Medical Corp and Cytek Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytek Biosciences and Profound Medical 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 Profound Medical Corp are associated (or correlated) with Cytek Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytek Biosciences has no effect on the direction of Profound Medical i.e., Profound Medical and Cytek Biosciences go up and down completely randomly.

Pair Corralation between Profound Medical and Cytek Biosciences

Given the investment horizon of 90 days Profound Medical Corp is expected to generate 0.67 times more return on investment than Cytek Biosciences. However, Profound Medical Corp is 1.5 times less risky than Cytek Biosciences. It trades about -0.08 of its potential returns per unit of risk. Cytek Biosciences is currently generating about -0.15 per unit of risk. If you would invest  841.00  in Profound Medical Corp on December 1, 2024 and sell it today you would lose (126.00) from holding Profound Medical Corp or give up 14.98% of portfolio value over 90 days.

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

Profound Medical Corp  vs.  Cytek Biosciences

Profound Medical Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Profound Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with Profound Medical and Cytek Biosciences

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

The idea behind Profound Medical Corp and Cytek Biosciences 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.