Correlation Between ReShape Lifesciences and Accuray Incorporated

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

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

Diversification Opportunities for ReShape Lifesciences and Accuray Incorporated

-0.02

Correlation Coefficient

ReShape Lifesciences  Accuray Incorporated

Good diversification

The 3 months correlation between ReShape and Accuray is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding ReShape Lifesciences and Accuray Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accuray Incorporated and ReShape Lifesciences 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 ReShape Lifesciences are associated (or correlated) with Accuray Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accuray Incorporated has no effect on the direction of ReShape Lifesciences i.e., ReShape Lifesciences and Accuray Incorporated go up and down completely randomly.

Pair Corralation between ReShape Lifesciences and Accuray Incorporated

Given the investment horizon of 90 days ReShape Lifesciences is expected to under-perform the Accuray Incorporated. But the stock apears to be less risky and, when comparing its historical volatility, ReShape Lifesciences is 1.19 times less risky than Accuray Incorporated. The stock trades about -0.27 of its potential returns per unit of risk. The Accuray Incorporated is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  203.00  in Accuray Incorporated on October 5, 2024 and sell it today you would lose (5.00) from holding Accuray Incorporated or give up 2.46% of portfolio value over 90 days.

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

ReShape Lifesciences  vs.  Accuray Incorporated

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 latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Accuray Incorporated

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Accuray Incorporated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Accuray Incorporated may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ReShape Lifesciences and Accuray Incorporated

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

The idea behind ReShape Lifesciences and Accuray Incorporated 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.