Correlation Between Sonida Senior and Microbot Medical

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

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

Diversification Opportunities for Sonida Senior and Microbot Medical

-0.36

Correlation Coefficient

Sonida Senior  Microbot Medical

Very good diversification

The 3 months correlation between Sonida and Microbot is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and Sonida Senior 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 Sonida Senior Living 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 Sonida Senior i.e., Sonida Senior and Microbot Medical go up and down completely randomly.

Pair Corralation between Sonida Senior and Microbot Medical

Given the investment horizon of 90 days Sonida Senior Living is expected to under-perform the Microbot Medical. In addition to that, Sonida Senior is 1.04 times more volatile than Microbot Medical. It trades about -0.01 of its total potential returns per unit of risk. Microbot Medical is currently generating about 0.07 per unit of volatility. If you would invest  87.00  in Microbot Medical on September 3, 2024 and sell it today you would earn a total of  10.00  from holding Microbot Medical or generate 11.49% return on investment over 90 days.

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

Sonida Senior Living  vs.  Microbot Medical

Sonida Senior Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonida Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Sonida Senior is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Microbot Medical

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sonida Senior and Microbot Medical

The main advantage of trading using opposite Sonida Senior and Microbot Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior 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 Sonida Senior Living 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.