Correlation Between Microbot Medical and CarsalesCom

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

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

Diversification Opportunities for Microbot Medical and CarsalesCom

0.47

Correlation Coefficient

Microbot Medical  CarsalesCom

Very weak diversification

The 3 months correlation between Microbot and CarsalesCom is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Microbot Medical i.e., Microbot Medical and CarsalesCom go up and down completely randomly.

Pair Corralation between Microbot Medical and CarsalesCom

Assuming the 90 days trading horizon Microbot Medical is expected to generate 1.06 times less return on investment than CarsalesCom. In addition to that, Microbot Medical is 6.61 times more volatile than CarsalesCom. It trades about 0.01 of its total potential returns per unit of risk. CarsalesCom is currently generating about 0.09 per unit of volatility. If you would invest  1,208  in CarsalesCom on September 21, 2024 and sell it today you would earn a total of  1,092  from holding CarsalesCom or generate 90.4% return on investment over 90 days.

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

Microbot Medical  vs.  CarsalesCom

Microbot Medical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 8 (%) 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.

CarsalesCom

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CarsalesCom are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CarsalesCom 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 CarsalesCom

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

The idea behind Microbot Medical and CarsalesCom 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.