Correlation Between Microbot Medical and Provident

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

By analyzing existing cross correlation between Microbot Medical and Provident Financial 7405, you can compare the effects of market volatilities on Microbot Medical and Provident 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 Provident. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microbot Medical and Provident.

Diversification Opportunities for Microbot Medical and Provident

0.41

Correlation Coefficient

Microbot Medical  Provident

Very weak diversification

The 3 months correlation between Microbot and Provident is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and Provident Financial 7405 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provident Financial 7405 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 Provident. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provident Financial 7405 has no effect on the direction of Microbot Medical i.e., Microbot Medical and Provident go up and down completely randomly.

Pair Corralation between Microbot Medical and Provident

Given the investment horizon of 90 days Microbot Medical is expected to generate 2.22 times more return on investment than Provident. However, Microbot Medical is 2.22 times more volatile than Provident Financial 7405. It trades about 0.04 of its potential returns per unit of risk. Provident Financial 7405 is currently generating about -0.03 per unit of risk. If you would invest  96.00  in Microbot Medical on September 14, 2024 and sell it today you would earn a total of  4.00  from holding Microbot Medical or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	49.21%
Values	Daily Returns

Microbot Medical  vs.  Provident Financial 7405

Microbot Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 2 (%) 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.

Provident Financial 7405

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Provident Financial 7405 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Provident is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Microbot Medical and Provident

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

The idea behind Microbot Medical and Provident Financial 7405 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.