Correlation Between Microbot Medical and Balchem

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

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

Diversification Opportunities for Microbot Medical and Balchem

-0.52

Correlation Coefficient

Microbot Medical  Balchem

Excellent diversification

The 3 months correlation between Microbot and Balchem is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem 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 Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of Microbot Medical i.e., Microbot Medical and Balchem go up and down completely randomly.

Pair Corralation between Microbot Medical and Balchem

Given the investment horizon of 90 days Microbot Medical is expected to generate 10.48 times more return on investment than Balchem. However, Microbot Medical is 10.48 times more volatile than Balchem. It trades about 0.08 of its potential returns per unit of risk. Balchem is currently generating about 0.02 per unit of risk. If you would invest  118.00  in Microbot Medical on December 29, 2024 and sell it today you would earn a total of  28.00  from holding Microbot Medical or generate 23.73% return on investment over 90 days.

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

Microbot Medical  vs.  Balchem

Microbot Medical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Balchem

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Balchem are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Balchem is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Microbot Medical and Balchem

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

The idea behind Microbot Medical and Balchem 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..