Correlation Between Coffee Holding and Microbot Medical

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

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

Diversification Opportunities for Coffee Holding and Microbot Medical

0.54

Correlation Coefficient

Coffee Holding  Microbot Medical

Very weak diversification

The 3 months correlation between Coffee and Microbot is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and Coffee Holding 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 Coffee Holding Co 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 Coffee Holding i.e., Coffee Holding and Microbot Medical go up and down completely randomly.

Pair Corralation between Coffee Holding and Microbot Medical

Assuming the 90 days horizon Coffee Holding Co is expected to under-perform the Microbot Medical. In addition to that, Coffee Holding is 1.29 times more volatile than Microbot Medical. It trades about -0.08 of its total potential returns per unit of risk. Microbot Medical is currently generating about 0.29 per unit of volatility. If you would invest  92.00  in Microbot Medical on October 5, 2024 and sell it today you would earn a total of  17.00  from holding Microbot Medical or generate 18.48% return on investment over 90 days.

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

Coffee Holding Co  vs.  Microbot Medical

Coffee Holding

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Coffee Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, Coffee Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Microbot Medical

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Microbot Medical has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Coffee Holding and Microbot Medical

The main advantage of trading using opposite Coffee Holding and Microbot Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Holding 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 Coffee Holding Co 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.