Correlation Between ProPhase Labs and ISpecimen

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

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

Diversification Opportunities for ProPhase Labs and ISpecimen

0.45

Correlation Coefficient

ProPhase Labs  ISpecimen

Very weak diversification

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

Pair Corralation between ProPhase Labs and ISpecimen

Given the investment horizon of 90 days ProPhase Labs is expected to generate 1.92 times more return on investment than ISpecimen. However, ProPhase Labs is 1.92 times more volatile than iSpecimen. It trades about -0.01 of its potential returns per unit of risk. iSpecimen is currently generating about -0.19 per unit of risk. 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

ProPhase Labs  vs.  iSpecimen

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.

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.

Pair Trading with ProPhase Labs and ISpecimen

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

The idea behind ProPhase Labs and iSpecimen 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.