Correlation Between Definitive Healthcare and ReShape Lifesciences

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Can any of the company-specific risk be diversified away by investing in both Definitive Healthcare 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 Definitive Healthcare and ReShape Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Definitive Healthcare Corp and ReShape Lifesciences, you can compare the effects of market volatilities on Definitive Healthcare 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 Definitive Healthcare with a short position of ReShape Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definitive Healthcare and ReShape Lifesciences.

Diversification Opportunities for Definitive Healthcare and ReShape Lifesciences

-0.92
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Definitive and ReShape is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and ReShape Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReShape Lifesciences and Definitive Healthcare 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 Definitive Healthcare Corp 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 Definitive Healthcare i.e., Definitive Healthcare and ReShape Lifesciences go up and down completely randomly.

Pair Corralation between Definitive Healthcare and ReShape Lifesciences

Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to generate 0.37 times more return on investment than ReShape Lifesciences. However, Definitive Healthcare Corp is 2.68 times less risky than ReShape Lifesciences. It trades about 0.15 of its potential returns per unit of risk. ReShape Lifesciences is currently generating about -0.08 per unit of risk. If you would invest  271.00  in Definitive Healthcare Corp on April 24, 2025 and sell it today you would earn a total of  128.00  from holding Definitive Healthcare Corp or generate 47.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Definitive Healthcare Corp  vs.  ReShape Lifesciences

 Performance 
       Timeline  
Definitive Healthcare 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Definitive Healthcare Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Definitive Healthcare demonstrated solid returns over the last few months and may actually be approaching a breakup point.
ReShape Lifesciences 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days ReShape Lifesciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Definitive Healthcare and ReShape Lifesciences Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Definitive Healthcare and ReShape Lifesciences

The main advantage of trading using opposite Definitive Healthcare and ReShape Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definitive Healthcare 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 Definitive Healthcare Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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