Correlation Between Medtronic PLC and Cytek Biosciences

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

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

Diversification Opportunities for Medtronic PLC and Cytek Biosciences

-0.56

Correlation Coefficient

Medtronic PLC  Cytek Biosciences

Excellent diversification

The 3 months correlation between Medtronic and Cytek is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic PLC and Cytek Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytek Biosciences and Medtronic PLC 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 Medtronic PLC 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 Medtronic PLC i.e., Medtronic PLC and Cytek Biosciences go up and down completely randomly.

Pair Corralation between Medtronic PLC and Cytek Biosciences

Considering the 90-day investment horizon Medtronic PLC is expected to under-perform the Cytek Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Medtronic PLC is 7.19 times less risky than Cytek Biosciences. The stock trades about -0.12 of its potential returns per unit of risk. The Cytek Biosciences is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  520.00  in Cytek Biosciences on September 3, 2024 and sell it today you would earn a total of  133.00  from holding Cytek Biosciences or generate 25.58% return on investment over 90 days.

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

Medtronic PLC  vs.  Cytek Biosciences

Medtronic PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medtronic PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Medtronic PLC is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Cytek Biosciences

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cytek Biosciences are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward-looking signals, Cytek Biosciences sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medtronic PLC and Cytek Biosciences

The main advantage of trading using opposite Medtronic PLC and Cytek Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medtronic PLC 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 Medtronic PLC 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.