Correlation Between Treace Medical and Cytek Biosciences

Can any of the company-specific risk be diversified away by investing in both Treace 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 Treace 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 Treace Medical Concepts and Cytek Biosciences, you can compare the effects of market volatilities on Treace 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 Treace Medical with a short position of Cytek Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treace Medical and Cytek Biosciences.

Diversification Opportunities for Treace Medical and Cytek Biosciences

-0.31

Correlation Coefficient

Treace Medical  Cytek Biosciences

Very good diversification

The 3 months correlation between Treace and Cytek is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Treace Medical Concepts and Cytek Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytek Biosciences and Treace 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 Treace Medical Concepts 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 Treace Medical i.e., Treace Medical and Cytek Biosciences go up and down completely randomly.

Pair Corralation between Treace Medical and Cytek Biosciences

Given the investment horizon of 90 days Treace Medical Concepts is expected to generate 0.97 times more return on investment than Cytek Biosciences. However, Treace Medical Concepts is 1.03 times less risky than Cytek Biosciences. It trades about 0.11 of its potential returns per unit of risk. Cytek Biosciences is currently generating about -0.16 per unit of risk. If you would invest  698.00  in Treace Medical Concepts on December 27, 2024 and sell it today you would earn a total of  160.00  from holding Treace Medical Concepts or generate 22.92% return on investment over 90 days.

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

Treace Medical Concepts  vs.  Cytek Biosciences

Treace Medical Concepts

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Treace Medical Concepts are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Treace Medical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 Treace Medical and Cytek Biosciences

The main advantage of trading using opposite Treace Medical and Cytek Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treace 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 Treace Medical Concepts 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.