Correlation Between Microbot Medical and SIMS METAL

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

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

Diversification Opportunities for Microbot Medical and SIMS METAL

0.48

Correlation Coefficient

Microbot Medical  SIMS METAL

Very weak diversification

The 3 months correlation between Microbot and SIMS is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and SIMS METAL MGT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS METAL MGT 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 SIMS METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMS METAL MGT has no effect on the direction of Microbot Medical i.e., Microbot Medical and SIMS METAL go up and down completely randomly.

Pair Corralation between Microbot Medical and SIMS METAL

Assuming the 90 days trading horizon Microbot Medical is expected to generate 1.35 times more return on investment than SIMS METAL. However, Microbot Medical is 1.35 times more volatile than SIMS METAL MGT. It trades about 0.11 of its potential returns per unit of risk. SIMS METAL MGT is currently generating about 0.02 per unit of risk. If you would invest  77.00  in Microbot Medical on September 22, 2024 and sell it today you would earn a total of  15.00  from holding Microbot Medical or generate 19.48% return on investment over 90 days.

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

Microbot Medical  vs.  SIMS METAL MGT

Microbot Medical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

SIMS METAL MGT

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SIMS METAL MGT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, SIMS METAL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Microbot Medical and SIMS METAL

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

The idea behind Microbot Medical and SIMS METAL MGT 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.