Correlation Between Microbot Medical and RTL Group

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

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

Diversification Opportunities for Microbot Medical and RTL Group

-0.45

Correlation Coefficient

Microbot Medical  RTL Group

Very good diversification

The 3 months correlation between Microbot and RTL is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and RTL Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL Group SA 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 RTL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL Group SA has no effect on the direction of Microbot Medical i.e., Microbot Medical and RTL Group go up and down completely randomly.

Pair Corralation between Microbot Medical and RTL Group

Assuming the 90 days trading horizon Microbot Medical is expected to under-perform the RTL Group. In addition to that, Microbot Medical is 1.7 times more volatile than RTL Group SA. It trades about -0.01 of its total potential returns per unit of risk. RTL Group SA is currently generating about 0.31 per unit of volatility. If you would invest  2,400  in RTL Group SA on September 27, 2024 and sell it today you would earn a total of  245.00  from holding RTL Group SA or generate 10.21% return on investment over 90 days.

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

Microbot Medical  vs.  RTL Group SA

Microbot Medical

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 9 (%) 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.

RTL Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTL Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Microbot Medical and RTL Group

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

The idea behind Microbot Medical and RTL Group SA 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.