Correlation Between Cheche Group and Tarsus Pharmaceuticals

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

By analyzing existing cross correlation between Cheche Group Class and Tarsus Pharmaceuticals, you can compare the effects of market volatilities on Cheche Group and Tarsus Pharmaceuticals 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 Cheche Group with a short position of Tarsus Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheche Group and Tarsus Pharmaceuticals.

Diversification Opportunities for Cheche Group and Tarsus Pharmaceuticals

0.22

Correlation Coefficient

Cheche Group  Tarsus Pharmaceuticals

Modest diversification

The 3 months correlation between Cheche and Tarsus is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Cheche Group Class and Tarsus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarsus Pharmaceuticals and Cheche Group 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 Cheche Group Class are associated (or correlated) with Tarsus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarsus Pharmaceuticals has no effect on the direction of Cheche Group i.e., Cheche Group and Tarsus Pharmaceuticals go up and down completely randomly.

Pair Corralation between Cheche Group and Tarsus Pharmaceuticals

Considering the 90-day investment horizon Cheche Group Class is expected to generate 2.2 times more return on investment than Tarsus Pharmaceuticals. However, Cheche Group is 2.2 times more volatile than Tarsus Pharmaceuticals. It trades about 0.17 of its potential returns per unit of risk. Tarsus Pharmaceuticals is currently generating about 0.35 per unit of risk. If you would invest  86.00  in Cheche Group Class on October 9, 2024 and sell it today you would earn a total of  9.00  from holding Cheche Group Class or generate 10.47% return on investment over 90 days.

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

Cheche Group Class  vs.  Tarsus Pharmaceuticals

Cheche Group Class

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cheche Group Class are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Cheche Group reported solid returns over the last few months and may actually be approaching a breakup point.

Tarsus Pharmaceuticals

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tarsus Pharmaceuticals are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Tarsus Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheche Group and Tarsus Pharmaceuticals

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

The idea behind Cheche Group Class and Tarsus Pharmaceuticals 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.