Correlation Between Inogen and ReShape Lifesciences

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

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

Diversification Opportunities for Inogen and ReShape Lifesciences

0.38

Correlation Coefficient

Inogen  ReShape Lifesciences

Weak diversification

The 3 months correlation between Inogen and ReShape is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Inogen Inc and ReShape Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReShape Lifesciences and Inogen 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 Inogen Inc 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 Inogen i.e., Inogen and ReShape Lifesciences go up and down completely randomly.

Pair Corralation between Inogen and ReShape Lifesciences

Given the investment horizon of 90 days Inogen Inc is expected to generate 0.72 times more return on investment than ReShape Lifesciences. However, Inogen Inc is 1.39 times less risky than ReShape Lifesciences. It trades about -0.29 of its potential returns per unit of risk. ReShape Lifesciences is currently generating about -0.27 per unit of risk. If you would invest  1,011  in Inogen Inc on October 1, 2024 and sell it today you would lose (153.00) from holding Inogen Inc or give up 15.13% of portfolio value over 90 days.

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

Inogen Inc  vs.  ReShape Lifesciences

Inogen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inogen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 comparatively stable essential indicators, ReShape Lifesciences is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Inogen and ReShape Lifesciences

The main advantage of trading using opposite Inogen and ReShape Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inogen 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 Inogen Inc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.