Correlation Between Microbot Medical and Tandy Leather

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

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

Diversification Opportunities for Microbot Medical and Tandy Leather

0.31

Correlation Coefficient

Microbot Medical  Tandy Leather

Weak diversification

The 3 months correlation between Microbot and Tandy is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and Tandy Leather Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandy Leather Factory 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 Tandy Leather. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandy Leather Factory has no effect on the direction of Microbot Medical i.e., Microbot Medical and Tandy Leather go up and down completely randomly.

Pair Corralation between Microbot Medical and Tandy Leather

Given the investment horizon of 90 days Microbot Medical is expected to generate 4.2 times more return on investment than Tandy Leather. However, Microbot Medical is 4.2 times more volatile than Tandy Leather Factory. It trades about 0.11 of its potential returns per unit of risk. Tandy Leather Factory is currently generating about 0.03 per unit of risk. If you would invest  100.00  in Microbot Medical on October 20, 2024 and sell it today you would earn a total of  64.00  from holding Microbot Medical or generate 64.0% 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.  Tandy Leather Factory

Microbot Medical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 8 (%) 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.

Tandy Leather Factory

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tandy Leather Factory are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Tandy Leather is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Microbot Medical and Tandy Leather

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

The idea behind Microbot Medical and Tandy Leather Factory 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.