Correlation Between Microbot Medical and EDAP TMS

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Can any of the company-specific risk be diversified away by investing in both Microbot Medical and EDAP TMS 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 EDAP TMS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microbot Medical and EDAP TMS SA, you can compare the effects of market volatilities on Microbot Medical and EDAP TMS 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 EDAP TMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microbot Medical and EDAP TMS.

Diversification Opportunities for Microbot Medical and EDAP TMS

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Microbot and EDAP is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and EDAP TMS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDAP TMS 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 EDAP TMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDAP TMS SA has no effect on the direction of Microbot Medical i.e., Microbot Medical and EDAP TMS go up and down completely randomly.

Pair Corralation between Microbot Medical and EDAP TMS

Given the investment horizon of 90 days Microbot Medical is expected to generate 0.87 times more return on investment than EDAP TMS. However, Microbot Medical is 1.15 times less risky than EDAP TMS. It trades about 0.07 of its potential returns per unit of risk. EDAP TMS SA is currently generating about -0.17 per unit of risk. If you would invest  88.00  in Microbot Medical on August 30, 2024 and sell it today you would earn a total of  9.00  from holding Microbot Medical or generate 10.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Microbot Medical  vs.  EDAP TMS SA

 Performance 
       Timeline  
Microbot Medical 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
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 uncertain basic indicators, Microbot Medical may actually be approaching a critical reversion point that can send shares even higher in December 2024.
EDAP TMS SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days EDAP TMS SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Microbot Medical and EDAP TMS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microbot Medical and EDAP TMS

The main advantage of trading using opposite Microbot Medical and EDAP TMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microbot Medical position performs unexpectedly, EDAP TMS 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 EDAP TMS will offset losses from the drop in EDAP TMS's long position.
The idea behind Microbot Medical and EDAP TMS 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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