Correlation Between Heineken Holding and Microbot Medical

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

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

Diversification Opportunities for Heineken Holding and Microbot Medical

-0.59

Correlation Coefficient

Heineken Holding  Microbot Medical

Excellent diversification

The 3 months correlation between Heineken and Microbot is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Holding NV and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and Heineken Holding 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 Heineken Holding NV 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 Heineken Holding i.e., Heineken Holding and Microbot Medical go up and down completely randomly.

Pair Corralation between Heineken Holding and Microbot Medical

Assuming the 90 days horizon Heineken Holding NV is expected to under-perform the Microbot Medical. But the stock apears to be less risky and, when comparing its historical volatility, Heineken Holding NV is 2.75 times less risky than Microbot Medical. The stock trades about -0.21 of its potential returns per unit of risk. The Microbot Medical is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  75.00  in Microbot Medical on September 5, 2024 and sell it today you would earn a total of  19.00  from holding Microbot Medical or generate 25.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Heineken Holding NV  vs.  Microbot Medical

Heineken Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heineken Holding NV 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 nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Microbot Medical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 10 (%) 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 Heineken Holding and Microbot Medical

The main advantage of trading using opposite Heineken Holding and Microbot Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken Holding 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 Heineken Holding NV 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.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.