Correlation Between Tarsus Pharmaceuticals and Evofem Biosciences

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

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

Diversification Opportunities for Tarsus Pharmaceuticals and Evofem Biosciences

-0.81

Correlation Coefficient

Tarsus Pharmaceuticals  Evofem Biosciences

Pay attention - limited upside

The 3 months correlation between Tarsus and Evofem is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tarsus Pharmaceuticals and Evofem Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evofem Biosciences and Tarsus Pharmaceuticals 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 Tarsus Pharmaceuticals are associated (or correlated) with Evofem Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evofem Biosciences has no effect on the direction of Tarsus Pharmaceuticals i.e., Tarsus Pharmaceuticals and Evofem Biosciences go up and down completely randomly.

Pair Corralation between Tarsus Pharmaceuticals and Evofem Biosciences

If you would invest  2,617  in Tarsus Pharmaceuticals on August 31, 2024 and sell it today you would earn a total of  2,467  from holding Tarsus Pharmaceuticals or generate 94.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Tarsus Pharmaceuticals  vs.  Evofem Biosciences

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.

Evofem Biosciences

Risk-Adjusted Performance

0 of 100

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 rather sound primary indicators, Evofem Biosciences is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tarsus Pharmaceuticals and Evofem Biosciences

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

The idea behind Tarsus Pharmaceuticals and Evofem 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.