Correlation Between Microbot Medical and TKO Group

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

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

Diversification Opportunities for Microbot Medical and TKO Group

0.39

Correlation Coefficient

Microbot Medical  TKO Group

Weak diversification

The 3 months correlation between Microbot and TKO is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and TKO Group Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKO Group Holdings, 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 TKO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKO Group Holdings, has no effect on the direction of Microbot Medical i.e., Microbot Medical and TKO Group go up and down completely randomly.

Pair Corralation between Microbot Medical and TKO Group

Given the investment horizon of 90 days Microbot Medical is expected to generate 1.4 times less return on investment than TKO Group. In addition to that, Microbot Medical is 1.21 times more volatile than TKO Group Holdings,. It trades about 0.12 of its total potential returns per unit of risk. TKO Group Holdings, is currently generating about 0.2 per unit of volatility. If you would invest  13,279  in TKO Group Holdings, on September 21, 2024 and sell it today you would earn a total of  1,075  from holding TKO Group Holdings, or generate 8.1% return on investment over 90 days.

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

Microbot Medical  vs.  TKO Group Holdings,

Microbot Medical

Risk-Adjusted Performance

7 of 100

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 conflicting basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

TKO Group Holdings,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TKO Group Holdings, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward-looking signals, TKO Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microbot Medical and TKO Group

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

The idea behind Microbot Medical and TKO Group Holdings, 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.