Correlation Between Microbot Medical and BII Railway

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

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

Diversification Opportunities for Microbot Medical and BII Railway

0.09

Correlation Coefficient

Microbot Medical  BII Railway

Significant diversification

The 3 months correlation between Microbot and BII is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Microbot Medical i.e., Microbot Medical and BII Railway go up and down completely randomly.

Pair Corralation between Microbot Medical and BII Railway

Assuming the 90 days trading horizon Microbot Medical is expected to generate 15.47 times more return on investment than BII Railway. However, Microbot Medical is 15.47 times more volatile than BII Railway Transportation. It trades about 0.1 of its potential returns per unit of risk. BII Railway Transportation is currently generating about 0.05 per unit of risk. If you would invest  93.00  in Microbot Medical on December 21, 2024 and sell it today you would earn a total of  61.00  from holding Microbot Medical or generate 65.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Microbot Medical  vs.  BII Railway Transportation

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

BII Railway Transpor

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Microbot Medical and BII Railway

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

The idea behind Microbot Medical and BII Railway Transportation 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.