Correlation Between PH Tech and LabGenomics

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

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

Diversification Opportunities for PH Tech and LabGenomics

0.07

Correlation Coefficient

PH Tech  LabGenomics

Significant diversification

The 3 months correlation between 239890 and LabGenomics is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding PH Tech Co and LabGenomics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LabGenomics and PH Tech 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 PH Tech Co are associated (or correlated) with LabGenomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LabGenomics has no effect on the direction of PH Tech i.e., PH Tech and LabGenomics go up and down completely randomly.

Pair Corralation between PH Tech and LabGenomics

Assuming the 90 days trading horizon PH Tech Co is expected to under-perform the LabGenomics. But the stock apears to be less risky and, when comparing its historical volatility, PH Tech Co is 1.27 times less risky than LabGenomics. The stock trades about -0.12 of its potential returns per unit of risk. The LabGenomics Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  383,500  in LabGenomics Co on September 15, 2024 and sell it today you would lose (121,000) from holding LabGenomics Co or give up 31.55% of portfolio value over 90 days.

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

PH Tech Co  vs.  LabGenomics Co

PH Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PH Tech Co 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 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.

LabGenomics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LabGenomics Co 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 current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PH Tech and LabGenomics

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

The idea behind PH Tech Co and LabGenomics Co 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.