Correlation Between Tandy Leather and Microbot Medical

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

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

Diversification Opportunities for Tandy Leather and Microbot Medical

0.31

Correlation Coefficient

Tandy Leather  Microbot Medical

Weak diversification

The 3 months correlation between Tandy and Microbot is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tandy Leather Factory and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and Tandy Leather 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 Tandy Leather Factory 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 Tandy Leather i.e., Tandy Leather and Microbot Medical go up and down completely randomly.

Pair Corralation between Tandy Leather and Microbot Medical

Considering the 90-day investment horizon Tandy Leather Factory is expected to generate 0.43 times more return on investment than Microbot Medical. However, Tandy Leather Factory is 2.33 times less risky than Microbot Medical. It trades about 0.03 of its potential returns per unit of risk. Microbot Medical is currently generating about 0.0 per unit of risk. If you would invest  421.00  in Tandy Leather Factory on September 14, 2024 and sell it today you would earn a total of  53.00  from holding Tandy Leather Factory or generate 12.59% return on investment over 90 days.

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

Tandy Leather Factory  vs.  Microbot Medical

Tandy Leather Factory

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tandy Leather Factory are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Tandy Leather reported solid returns over the last few months and may actually be approaching a breakup point.

Microbot Medical

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Microbot Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tandy Leather and Microbot Medical

The main advantage of trading using opposite Tandy Leather and Microbot Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tandy Leather 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 Tandy Leather Factory 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.