Correlation Between Trinity Biotech and ProPhase Labs

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

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

Diversification Opportunities for Trinity Biotech and ProPhase Labs

0.52

Correlation Coefficient

Trinity Biotech  ProPhase Labs

Very weak diversification

The 3 months correlation between Trinity and ProPhase is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Trinity Biotech plc and ProPhase Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProPhase Labs and Trinity Biotech 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 Trinity Biotech plc 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 Trinity Biotech i.e., Trinity Biotech and ProPhase Labs go up and down completely randomly.

Pair Corralation between Trinity Biotech and ProPhase Labs

Given the investment horizon of 90 days Trinity Biotech plc is expected to generate 0.86 times more return on investment than ProPhase Labs. However, Trinity Biotech plc is 1.16 times less risky than ProPhase Labs. It trades about -0.11 of its potential returns per unit of risk. ProPhase Labs is currently generating about -0.22 per unit of risk. If you would invest  160.00  in Trinity Biotech plc on September 13, 2024 and sell it today you would lose (70.00) from holding Trinity Biotech plc or give up 43.75% of portfolio value over 90 days.

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

Trinity Biotech plc  vs.  ProPhase Labs

Trinity Biotech plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trinity Biotech plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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.

Pair Trading with Trinity Biotech and ProPhase Labs

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

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.