Correlation Between Laureate Education and Microbot Medical

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

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

Diversification Opportunities for Laureate Education and Microbot Medical

0.45

Correlation Coefficient

Laureate Education  Microbot Medical

Very weak diversification

The 3 months correlation between Laureate and Microbot is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and Laureate Education 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 Laureate Education 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 Laureate Education i.e., Laureate Education and Microbot Medical go up and down completely randomly.

Pair Corralation between Laureate Education and Microbot Medical

Assuming the 90 days trading horizon Laureate Education is expected to under-perform the Microbot Medical. But the stock apears to be less risky and, when comparing its historical volatility, Laureate Education is 2.48 times less risky than Microbot Medical. The stock trades about -0.02 of its potential returns per unit of risk. The Microbot Medical is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  95.00  in Microbot Medical on September 12, 2024 and sell it today you would lose (1.00) from holding Microbot Medical or give up 1.05% of portfolio value over 90 days.

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

Laureate Education  vs.  Microbot Medical

Laureate Education

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Laureate Education are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Laureate Education reported solid returns over the last few months and may actually be approaching a breakup point.

Microbot Medical

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 5 (%) 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 Laureate Education and Microbot Medical

The main advantage of trading using opposite Laureate Education and Microbot Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education 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 Laureate Education 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.