Correlation Between Rapid Micro and NanoVibronix

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

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

Diversification Opportunities for Rapid Micro and NanoVibronix

0.26

Correlation Coefficient

Rapid Micro  NanoVibronix

Modest diversification

The 3 months correlation between Rapid and NanoVibronix is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Rapid Micro Biosystems and NanoVibronix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NanoVibronix and Rapid Micro 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 Rapid Micro Biosystems are associated (or correlated) with NanoVibronix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NanoVibronix has no effect on the direction of Rapid Micro i.e., Rapid Micro and NanoVibronix go up and down completely randomly.

Pair Corralation between Rapid Micro and NanoVibronix

Given the investment horizon of 90 days Rapid Micro is expected to generate 1.63 times less return on investment than NanoVibronix. But when comparing it to its historical volatility, Rapid Micro Biosystems is 1.63 times less risky than NanoVibronix. It trades about 0.1 of its potential returns per unit of risk. NanoVibronix is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  57.00  in NanoVibronix on August 31, 2024 and sell it today you would earn a total of  16.00  from holding NanoVibronix or generate 28.07% return on investment over 90 days.

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

Rapid Micro Biosystems  vs.  NanoVibronix

Rapid Micro Biosystems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rapid Micro Biosystems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Rapid Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.

NanoVibronix

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NanoVibronix are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, NanoVibronix showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rapid Micro and NanoVibronix

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

The idea behind Rapid Micro Biosystems and NanoVibronix 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.