Correlation Between Avita Medical and Microbot Medical

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

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

Diversification Opportunities for Avita Medical and Microbot Medical

-0.17

Correlation Coefficient

Avita Medical  Microbot Medical

Good diversification

The 3 months correlation between Avita and Microbot is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Avita Medical and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and Avita 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 Avita Medical are associated (or correlated) with Microbot Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microbot Medical has no effect on the direction of Avita Medical i.e., Avita Medical and Microbot Medical go up and down completely randomly.

Pair Corralation between Avita Medical and Microbot Medical

Given the investment horizon of 90 days Avita Medical is expected to under-perform the Microbot Medical. But the stock apears to be less risky and, when comparing its historical volatility, Avita Medical is 2.29 times less risky than Microbot Medical. The stock trades about -0.07 of its potential returns per unit of risk. The Microbot Medical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  118.00  in Microbot Medical on December 28, 2024 and sell it today you would earn a total of  34.00  from holding Microbot Medical or generate 28.81% return on investment over 90 days.

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

Avita Medical  vs.  Microbot Medical

Avita Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avita Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators 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.

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.

Pair Trading with Avita Medical and Microbot Medical

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

The idea behind Avita Medical and Microbot Medical 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.