Correlation Between Microbot Medical and Virco Manufacturing

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

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

Diversification Opportunities for Microbot Medical and Virco Manufacturing

0.28

Correlation Coefficient

Microbot Medical  Virco Manufacturing

Modest diversification

The 3 months correlation between Microbot and Virco is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and Virco Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virco Manufacturing 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 Virco Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virco Manufacturing has no effect on the direction of Microbot Medical i.e., Microbot Medical and Virco Manufacturing go up and down completely randomly.

Pair Corralation between Microbot Medical and Virco Manufacturing

Given the investment horizon of 90 days Microbot Medical is expected to generate 5.27 times more return on investment than Virco Manufacturing. However, Microbot Medical is 5.27 times more volatile than Virco Manufacturing. It trades about 0.08 of its potential returns per unit of risk. Virco Manufacturing is currently generating about -0.03 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Microbot Medical  vs.  Virco Manufacturing

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.

Virco Manufacturing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virco Manufacturing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Virco Manufacturing is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Microbot Medical and Virco Manufacturing

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

The idea behind Microbot Medical and Virco Manufacturing 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.