Correlation Between ReShape Lifesciences and Myomo

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

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

Diversification Opportunities for ReShape Lifesciences and Myomo

-0.24

Correlation Coefficient

ReShape Lifesciences  Myomo

Very good diversification

The 3 months correlation between ReShape and Myomo is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding ReShape Lifesciences and Myomo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myomo Inc 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 Myomo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myomo Inc has no effect on the direction of ReShape Lifesciences i.e., ReShape Lifesciences and Myomo go up and down completely randomly.

Pair Corralation between ReShape Lifesciences and Myomo

Given the investment horizon of 90 days ReShape Lifesciences is expected to under-perform the Myomo. But the stock apears to be less risky and, when comparing its historical volatility, ReShape Lifesciences is 1.23 times less risky than Myomo. The stock trades about -0.1 of its potential returns per unit of risk. The Myomo Inc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  383.00  in Myomo Inc on September 5, 2024 and sell it today you would earn a total of  156.00  from holding Myomo Inc or generate 40.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

ReShape Lifesciences  vs.  Myomo Inc

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 uncertain performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Myomo Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Myomo Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Myomo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ReShape Lifesciences and Myomo

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

The idea behind ReShape Lifesciences and Myomo Inc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.