Correlation Between Tarsus Pharmaceuticals and Quantum BioPharma

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

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

Diversification Opportunities for Tarsus Pharmaceuticals and Quantum BioPharma

0.1

Correlation Coefficient

Tarsus Pharmaceuticals  Quantum BioPharma

Average diversification

The 3 months correlation between Tarsus and Quantum is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Tarsus Pharmaceuticals and Quantum BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum BioPharma 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 Quantum BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum BioPharma has no effect on the direction of Tarsus Pharmaceuticals i.e., Tarsus Pharmaceuticals and Quantum BioPharma go up and down completely randomly.

Pair Corralation between Tarsus Pharmaceuticals and Quantum BioPharma

Given the investment horizon of 90 days Tarsus Pharmaceuticals is expected to under-perform the Quantum BioPharma. But the stock apears to be less risky and, when comparing its historical volatility, Tarsus Pharmaceuticals is 5.56 times less risky than Quantum BioPharma. The stock trades about -0.01 of its potential returns per unit of risk. The Quantum BioPharma is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  300.00  in Quantum BioPharma on December 20, 2024 and sell it today you would earn a total of  366.00  from holding Quantum BioPharma or generate 122.0% return on investment over 90 days.

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

Tarsus Pharmaceuticals  vs.  Quantum BioPharma

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.

Quantum BioPharma

Risk-Adjusted Performance

OK

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

Pair Trading with Tarsus Pharmaceuticals and Quantum BioPharma

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

The idea behind Tarsus Pharmaceuticals and Quantum BioPharma 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 Correlations module to find global opportunities by holding instruments from different markets.