Correlation Between ReShape Lifesciences and Bluejay Diagnostics

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

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

Diversification Opportunities for ReShape Lifesciences and Bluejay Diagnostics

-0.15

Correlation Coefficient

ReShape Lifesciences  Bluejay Diagnostics

Good diversification

The 3 months correlation between ReShape and Bluejay is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding ReShape Lifesciences and Bluejay Diagnostics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluejay Diagnostics 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 Bluejay Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluejay Diagnostics has no effect on the direction of ReShape Lifesciences i.e., ReShape Lifesciences and Bluejay Diagnostics go up and down completely randomly.

Pair Corralation between ReShape Lifesciences and Bluejay Diagnostics

Given the investment horizon of 90 days ReShape Lifesciences is expected to under-perform the Bluejay Diagnostics. In addition to that, ReShape Lifesciences is 1.43 times more volatile than Bluejay Diagnostics. It trades about -0.3 of its total potential returns per unit of risk. Bluejay Diagnostics is currently generating about 0.03 per unit of volatility. If you would invest  385.00  in Bluejay Diagnostics on December 29, 2024 and sell it today you would lose (1.00) from holding Bluejay Diagnostics or give up 0.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

ReShape Lifesciences  vs.  Bluejay Diagnostics

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

Bluejay Diagnostics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bluejay Diagnostics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Bluejay Diagnostics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ReShape Lifesciences and Bluejay Diagnostics

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

The idea behind ReShape Lifesciences and Bluejay Diagnostics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.