Correlation Between Personalis and ProPhase Labs

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

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

Diversification Opportunities for Personalis and ProPhase Labs

0.55

Correlation Coefficient

Personalis  ProPhase Labs

Very weak diversification

The 3 months correlation between Personalis and ProPhase is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Personalis and ProPhase Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProPhase Labs and Personalis 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 Personalis 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 Personalis i.e., Personalis and ProPhase Labs go up and down completely randomly.

Pair Corralation between Personalis and ProPhase Labs

Given the investment horizon of 90 days Personalis is expected to under-perform the ProPhase Labs. But the stock apears to be less risky and, when comparing its historical volatility, Personalis is 2.07 times less risky than ProPhase Labs. The stock trades about -0.11 of its potential returns per unit of risk. The ProPhase Labs is currently generating about -0.01 of returns per unit of risk over similar time horizon. 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

Personalis  vs.  ProPhase Labs

Personalis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Personalis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional 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 Personalis and ProPhase Labs

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

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.