Correlation Between ProPhase Labs and RadNet

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

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

Diversification Opportunities for ProPhase Labs and RadNet

-0.94

Correlation Coefficient

ProPhase Labs  RadNet

Pay attention - limited upside

The 3 months correlation between ProPhase and RadNet is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding ProPhase Labs and RadNet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RadNet Inc 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 RadNet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RadNet Inc has no effect on the direction of ProPhase Labs i.e., ProPhase Labs and RadNet go up and down completely randomly.

Pair Corralation between ProPhase Labs and RadNet

Given the investment horizon of 90 days ProPhase Labs is expected to under-perform the RadNet. In addition to that, ProPhase Labs is 2.48 times more volatile than RadNet Inc. It trades about -0.23 of its total potential returns per unit of risk. RadNet Inc is currently generating about 0.09 per unit of volatility. If you would invest  6,681  in RadNet Inc on September 17, 2024 and sell it today you would earn a total of  1,104  from holding RadNet Inc or generate 16.52% return on investment over 90 days.

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

ProPhase Labs  vs.  RadNet Inc

ProPhase Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProPhase Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

RadNet Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RadNet Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, RadNet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProPhase Labs and RadNet

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

The idea behind ProPhase Labs and RadNet Inc 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.