Correlation Between Diamyd Medical and Microbot Medical

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

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

Diversification Opportunities for Diamyd Medical and Microbot Medical

0.28

Correlation Coefficient

Diamyd Medical  Microbot Medical

Modest diversification

The 3 months correlation between Diamyd and Microbot is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and Diamyd 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 Diamyd Medical AB are associated (or correlated) with Microbot Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microbot Medical has no effect on the direction of Diamyd Medical i.e., Diamyd Medical and Microbot Medical go up and down completely randomly.

Pair Corralation between Diamyd Medical and Microbot Medical

Assuming the 90 days horizon Diamyd Medical AB is expected to generate 0.52 times more return on investment than Microbot Medical. However, Diamyd Medical AB is 1.93 times less risky than Microbot Medical. It trades about 0.03 of its potential returns per unit of risk. Microbot Medical is currently generating about 0.01 per unit of risk. If you would invest  139.00  in Diamyd Medical AB on October 4, 2024 and sell it today you would earn a total of  7.00  from holding Diamyd Medical AB or generate 5.04% return on investment over 90 days.

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

Diamyd Medical AB  vs.  Microbot Medical

Diamyd Medical AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Diamyd Medical AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Diamyd Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Microbot Medical

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 13 (%) 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.

Pair Trading with Diamyd Medical and Microbot Medical

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

The idea behind Diamyd Medical AB and Microbot Medical 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..