Correlation Between ProPhase Labs and Biodesix

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

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

Diversification Opportunities for ProPhase Labs and Biodesix

0.68

Correlation Coefficient

ProPhase Labs  Biodesix

Poor diversification

The 3 months correlation between ProPhase and Biodesix is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ProPhase Labs and Biodesix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biodesix and ProPhase Labs 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 ProPhase Labs are associated (or correlated) with Biodesix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biodesix has no effect on the direction of ProPhase Labs i.e., ProPhase Labs and Biodesix go up and down completely randomly.

Pair Corralation between ProPhase Labs and Biodesix

Given the investment horizon of 90 days ProPhase Labs is expected to generate 2.3 times more return on investment than Biodesix. However, ProPhase Labs is 2.3 times more volatile than Biodesix. It trades about 0.0 of its potential returns per unit of risk. Biodesix is currently generating about -0.21 per unit of risk. 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	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ProPhase Labs  vs.  Biodesix

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.

Biodesix

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biodesix 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 fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ProPhase Labs and Biodesix

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

The idea behind ProPhase Labs and Biodesix 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.