Correlation Between Global Ship and Microbot Medical

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

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

Diversification Opportunities for Global Ship and Microbot Medical

-0.32

Correlation Coefficient

Global Ship  Microbot Medical

Very good diversification

The 3 months correlation between Global and Microbot is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and Global Ship 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 Global Ship Lease are associated (or correlated) with Microbot Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microbot Medical has no effect on the direction of Global Ship i.e., Global Ship and Microbot Medical go up and down completely randomly.

Pair Corralation between Global Ship and Microbot Medical

Assuming the 90 days horizon Global Ship is expected to generate 24.37 times less return on investment than Microbot Medical. But when comparing it to its historical volatility, Global Ship Lease is 13.06 times less risky than Microbot Medical. It trades about 0.04 of its potential returns per unit of risk. Microbot Medical is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  108.00  in Microbot Medical on December 30, 2024 and sell it today you would earn a total of  28.00  from holding Microbot Medical or generate 25.93% return on investment over 90 days.

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

Global Ship Lease  vs.  Microbot Medical

Global Ship Lease

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Global Ship is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Microbot Medical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Ship and Microbot Medical

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

The idea behind Global Ship Lease and Microbot Medical 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.