Correlation Between Microbot Medical and GMO Internet

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

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

Diversification Opportunities for Microbot Medical and GMO Internet

-0.14

Correlation Coefficient

Microbot Medical  GMO Internet

Good diversification

The 3 months correlation between Microbot and GMO is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and GMO Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMO Internet 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 GMO Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMO Internet has no effect on the direction of Microbot Medical i.e., Microbot Medical and GMO Internet go up and down completely randomly.

Pair Corralation between Microbot Medical and GMO Internet

Assuming the 90 days trading horizon Microbot Medical is expected to generate 11.99 times more return on investment than GMO Internet. However, Microbot Medical is 11.99 times more volatile than GMO Internet. It trades about 0.1 of its potential returns per unit of risk. GMO Internet is currently generating about 0.18 per unit of risk. If you would invest  93.00  in Microbot Medical on December 22, 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Microbot Medical  vs.  GMO Internet

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

GMO Internet

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GMO Internet are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, GMO Internet reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microbot Medical and GMO Internet

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

The idea behind Microbot Medical and GMO Internet 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.