Correlation Between Tivic Health and ReShape Lifesciences

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

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

Diversification Opportunities for Tivic Health and ReShape Lifesciences

-0.65

Correlation Coefficient

Tivic Health  ReShape Lifesciences

Excellent diversification

The 3 months correlation between Tivic and ReShape is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Tivic Health Systems and ReShape Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReShape Lifesciences and Tivic Health 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 Tivic Health Systems are associated (or correlated) with ReShape Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReShape Lifesciences has no effect on the direction of Tivic Health i.e., Tivic Health and ReShape Lifesciences go up and down completely randomly.

Pair Corralation between Tivic Health and ReShape Lifesciences

Given the investment horizon of 90 days Tivic Health Systems is expected to under-perform the ReShape Lifesciences. In addition to that, Tivic Health is 1.27 times more volatile than ReShape Lifesciences. It trades about -0.15 of its total potential returns per unit of risk. ReShape Lifesciences is currently generating about 0.06 per unit of volatility. If you would invest  18.00  in ReShape Lifesciences on March 21, 2024 and sell it today you would earn a total of  2.00  from holding ReShape Lifesciences or generate 11.11% return on investment over 90 days.

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

Tivic Health Systems  vs.  ReShape Lifesciences

Tivic Health Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tivic Health Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ReShape Lifesciences

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ReShape Lifesciences are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal essential indicators, ReShape Lifesciences unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tivic Health and ReShape Lifesciences

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

The idea behind Tivic Health Systems and ReShape Lifesciences 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.