Correlation Between ProPhase Labs and Rushnet

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

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

Diversification Opportunities for ProPhase Labs and Rushnet

0.09

Correlation Coefficient

ProPhase Labs  Rushnet

Significant diversification

The 3 months correlation between ProPhase and Rushnet is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding ProPhase Labs and Rushnet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rushnet 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 Rushnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rushnet has no effect on the direction of ProPhase Labs i.e., ProPhase Labs and Rushnet go up and down completely randomly.

Pair Corralation between ProPhase Labs and Rushnet

Given the investment horizon of 90 days ProPhase Labs is expected to under-perform the Rushnet. But the stock apears to be less risky and, when comparing its historical volatility, ProPhase Labs is 3.49 times less risky than Rushnet. The stock trades about -0.02 of its potential returns per unit of risk. The Rushnet is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Rushnet on December 21, 2024 and sell it today you would earn a total of  0.00  from holding Rushnet or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

ProPhase Labs  vs.  Rushnet

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 latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Rushnet

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rushnet are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical indicators, Rushnet displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProPhase Labs and Rushnet

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

The idea behind ProPhase Labs and Rushnet 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.