Correlation Between Evofem Biosciences and CERo Therapeutics

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

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

Diversification Opportunities for Evofem Biosciences and CERo Therapeutics

0.0

Correlation Coefficient

Evofem Biosciences  CERo Therapeutics

Pay attention - limited upside

The 3 months correlation between Evofem and CERo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Evofem Biosciences and CERo Therapeutics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CERo Therapeutics and Evofem Biosciences 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 Evofem Biosciences are associated (or correlated) with CERo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CERo Therapeutics has no effect on the direction of Evofem Biosciences i.e., Evofem Biosciences and CERo Therapeutics go up and down completely randomly.

Pair Corralation between Evofem Biosciences and CERo Therapeutics

If you would invest  0.93  in CERo Therapeutics Holdings on December 28, 2024 and sell it today you would earn a total of  0.60  from holding CERo Therapeutics Holdings or generate 64.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Evofem Biosciences  vs.  CERo Therapeutics Holdings

Evofem Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evofem Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Evofem Biosciences is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

CERo Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CERo Therapeutics Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CERo Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evofem Biosciences and CERo Therapeutics

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

The idea behind Evofem Biosciences and CERo Therapeutics Holdings 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.