Correlation Between LumiraDx and ProPhase Labs

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

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

Diversification Opportunities for LumiraDx and ProPhase Labs

0.0

Correlation Coefficient

LumiraDx  ProPhase Labs

Pay attention - limited upside

The 3 months correlation between LumiraDx and ProPhase is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LumiraDx and ProPhase Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProPhase Labs and LumiraDx 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 LumiraDx 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 LumiraDx i.e., LumiraDx and ProPhase Labs go up and down completely randomly.

Pair Corralation between LumiraDx and ProPhase Labs

If you would invest  72.00  in ProPhase Labs on December 29, 2024 and sell it today you would lose (26.00) from holding ProPhase Labs or give up 36.11% of portfolio value over 90 days.

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

LumiraDx  vs.  ProPhase Labs

LumiraDx

Risk-Adjusted Performance

Very Weak

Over the last 90 days LumiraDx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, LumiraDx is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 LumiraDx and ProPhase Labs

The main advantage of trading using opposite LumiraDx and ProPhase Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LumiraDx 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 LumiraDx 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.