Correlation Between Tarsus Pharmaceuticals and Precigen

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

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

Diversification Opportunities for Tarsus Pharmaceuticals and Precigen

-0.49

Correlation Coefficient

Tarsus Pharmaceuticals  Precigen

Very good diversification

The 3 months correlation between Tarsus and Precigen is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Tarsus Pharmaceuticals and Precigen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precigen 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 Precigen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precigen has no effect on the direction of Tarsus Pharmaceuticals i.e., Tarsus Pharmaceuticals and Precigen go up and down completely randomly.

Pair Corralation between Tarsus Pharmaceuticals and Precigen

Given the investment horizon of 90 days Tarsus Pharmaceuticals is expected to under-perform the Precigen. But the stock apears to be less risky and, when comparing its historical volatility, Tarsus Pharmaceuticals is 1.97 times less risky than Precigen. The stock trades about -0.01 of its potential returns per unit of risk. The Precigen is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  76.00  in Precigen on December 20, 2024 and sell it today you would earn a total of  103.00  from holding Precigen or generate 135.53% return on investment over 90 days.

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

Tarsus Pharmaceuticals  vs.  Precigen

Tarsus Pharmaceuticals

Risk-Adjusted Performance

Very Weak

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

Precigen

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Precigen are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Precigen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tarsus Pharmaceuticals and Precigen

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

The idea behind Tarsus Pharmaceuticals and Precigen 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.