Correlation Between Microbot Medical and Tsingtao Brewery

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

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

Diversification Opportunities for Microbot Medical and Tsingtao Brewery

-0.03

Correlation Coefficient

Microbot Medical  Tsingtao Brewery

Good diversification

The 3 months correlation between Microbot and Tsingtao is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery 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 Tsingtao Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsingtao Brewery has no effect on the direction of Microbot Medical i.e., Microbot Medical and Tsingtao Brewery go up and down completely randomly.

Pair Corralation between Microbot Medical and Tsingtao Brewery

Assuming the 90 days trading horizon Microbot Medical is expected to generate 2.95 times more return on investment than Tsingtao Brewery. However, Microbot Medical is 2.95 times more volatile than Tsingtao Brewery. It trades about 0.01 of its potential returns per unit of risk. Tsingtao Brewery is currently generating about 0.03 per unit of risk. If you would invest  326.00  in Microbot Medical on September 29, 2024 and sell it today you would lose (226.00) from holding Microbot Medical or give up 69.33% of portfolio value over 90 days.

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

Microbot Medical  vs.  Tsingtao Brewery

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

Tsingtao Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsingtao Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Tsingtao Brewery is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Microbot Medical and Tsingtao Brewery

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

The idea behind Microbot Medical and Tsingtao Brewery 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.