Correlation Between ISpecimen and ProPhase Labs

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

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

Diversification Opportunities for ISpecimen and ProPhase Labs

0.45

Correlation Coefficient

ISpecimen  ProPhase Labs

Very weak diversification

The 3 months correlation between ISpecimen and ProPhase is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding iSpecimen and ProPhase Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProPhase Labs and ISpecimen 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 iSpecimen are associated (or correlated) with ProPhase Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProPhase Labs has no effect on the direction of ISpecimen i.e., ISpecimen and ProPhase Labs go up and down completely randomly.

Pair Corralation between ISpecimen and ProPhase Labs

Given the investment horizon of 90 days iSpecimen is expected to under-perform the ProPhase Labs. But the stock apears to be less risky and, when comparing its historical volatility, iSpecimen is 1.92 times less risky than ProPhase Labs. The stock trades about -0.19 of its potential returns per unit of risk. The ProPhase Labs is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  72.00  in ProPhase Labs on December 30, 2024 and sell it today you would lose (28.00) from holding ProPhase Labs or give up 38.89% of portfolio value over 90 days.

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

iSpecimen  vs.  ProPhase Labs

iSpecimen

Risk-Adjusted Performance

Very Weak

Over the last 90 days iSpecimen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ProPhase Labs

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProPhase Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, ProPhase Labs is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ISpecimen and ProPhase Labs

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

The idea behind iSpecimen and ProPhase Labs 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.