Correlation Between Biofrontera Warrants and Microbot Medical

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

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

Diversification Opportunities for Biofrontera Warrants and Microbot Medical

0.12

Correlation Coefficient

Biofrontera Warrants  Microbot Medical

Average diversification

The 3 months correlation between Biofrontera and Microbot is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Biofrontera Warrants and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and Biofrontera Warrants 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 Biofrontera Warrants 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 Biofrontera Warrants i.e., Biofrontera Warrants and Microbot Medical go up and down completely randomly.

Pair Corralation between Biofrontera Warrants and Microbot Medical

Assuming the 90 days horizon Biofrontera Warrants is expected to under-perform the Microbot Medical. But the stock apears to be less risky and, when comparing its historical volatility, Biofrontera Warrants is 1.24 times less risky than Microbot Medical. The stock trades about -0.08 of its potential returns per unit of risk. The Microbot Medical is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  101.00  in Microbot Medical on October 8, 2024 and sell it today you would earn a total of  113.00  from holding Microbot Medical or generate 111.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	84.21%
Values	Daily Returns

Biofrontera Warrants  vs.  Microbot Medical

Biofrontera Warrants

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Biofrontera Warrants are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Biofrontera Warrants showed solid returns over the last few months and may actually be approaching a breakup point.

Microbot Medical

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 11 (%) 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 Biofrontera Warrants and Microbot Medical

The main advantage of trading using opposite Biofrontera Warrants and Microbot Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biofrontera Warrants 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 Biofrontera Warrants 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 Global Correlations module to find global opportunities by holding instruments from different markets.