Correlation Between Alvotech and Microbot Medical

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

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

Diversification Opportunities for Alvotech and Microbot Medical

0.42

Correlation Coefficient

Alvotech  Microbot Medical

Very weak diversification

The 3 months correlation between Alvotech and Microbot is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and Alvotech 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 Alvotech 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 Alvotech i.e., Alvotech and Microbot Medical go up and down completely randomly.

Pair Corralation between Alvotech and Microbot Medical

Given the investment horizon of 90 days Alvotech is expected to under-perform the Microbot Medical. But the stock apears to be less risky and, when comparing its historical volatility, Alvotech is 6.99 times less risky than Microbot Medical. The stock trades about -0.06 of its potential returns per unit of risk. The Microbot Medical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  111.00  in Microbot Medical on December 27, 2024 and sell it today you would earn a total of  41.00  from holding Microbot Medical or generate 36.94% return on investment over 90 days.

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

Alvotech  vs.  Microbot Medical

Alvotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alvotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Microbot Medical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alvotech and Microbot Medical

The main advantage of trading using opposite Alvotech and Microbot Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alvotech 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 Alvotech 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.