Correlation Between Microbot Medical and Man Wah

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

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

Diversification Opportunities for Microbot Medical and Man Wah

0.11

Correlation Coefficient

Microbot Medical  Man Wah

Average diversification

The 3 months correlation between Microbot and Man is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and Man Wah Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Man Wah Holdings and Microbot Medical 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 Microbot Medical are associated (or correlated) with Man Wah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Man Wah Holdings has no effect on the direction of Microbot Medical i.e., Microbot Medical and Man Wah go up and down completely randomly.

Pair Corralation between Microbot Medical and Man Wah

Assuming the 90 days trading horizon Microbot Medical is expected to generate 4.87 times less return on investment than Man Wah. But when comparing it to its historical volatility, Microbot Medical is 1.82 times less risky than Man Wah. It trades about 0.04 of its potential returns per unit of risk. Man Wah Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  34.00  in Man Wah Holdings on September 30, 2024 and sell it today you would earn a total of  23.00  from holding Man Wah Holdings or generate 67.65% return on investment over 90 days.

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

Microbot Medical  vs.  Man Wah Holdings

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 uncertain basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Man Wah Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Man Wah Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Man Wah reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microbot Medical and Man Wah

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

The idea behind Microbot Medical and Man Wah Holdings 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.