Correlation Between Microbot Medical and Park Hotels

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

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

Diversification Opportunities for Microbot Medical and Park Hotels

0.03

Correlation Coefficient

Microbot Medical  Park Hotels

Significant diversification

The 3 months correlation between Microbot and Park is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts 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 Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Microbot Medical i.e., Microbot Medical and Park Hotels go up and down completely randomly.

Pair Corralation between Microbot Medical and Park Hotels

Given the investment horizon of 90 days Microbot Medical is expected to generate 7.72 times more return on investment than Park Hotels. However, Microbot Medical is 7.72 times more volatile than Park Hotels Resorts. It trades about 0.09 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about -0.21 per unit of risk. If you would invest  111.00  in Microbot Medical on December 27, 2024 and sell it today you would earn a total of  42.00  from holding Microbot Medical or generate 37.84% return on investment over 90 days.

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

Microbot Medical  vs.  Park Hotels Resorts

Microbot Medical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 7 (%) 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.

Park Hotels Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Park Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Microbot Medical and Park Hotels

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

The idea behind Microbot Medical and Park Hotels Resorts 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.