Correlation Between Summit Hotel and Microbot Medical

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

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

Diversification Opportunities for Summit Hotel and Microbot Medical

0.09

Correlation Coefficient

Summit Hotel  Microbot Medical

Significant diversification

The 3 months correlation between Summit and Microbot is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and Summit Hotel 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 Summit Hotel Properties 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 Summit Hotel i.e., Summit Hotel and Microbot Medical go up and down completely randomly.

Pair Corralation between Summit Hotel and Microbot Medical

Considering the 90-day investment horizon Summit Hotel is expected to generate 4.24 times less return on investment than Microbot Medical. But when comparing it to its historical volatility, Summit Hotel Properties is 1.53 times less risky than Microbot Medical. It trades about 0.08 of its potential returns per unit of risk. Microbot Medical is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  97.00  in Microbot Medical on September 30, 2024 and sell it today you would earn a total of  14.00  from holding Microbot Medical or generate 14.43% return on investment over 90 days.

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

Summit Hotel Properties  vs.  Microbot Medical

Summit Hotel Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summit Hotel Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Summit Hotel is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Microbot Medical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Summit Hotel and Microbot Medical

The main advantage of trading using opposite Summit Hotel and Microbot Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel 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 Summit Hotel Properties 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.