Correlation Between Playtech Plc and Microbot Medical

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

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

Diversification Opportunities for Playtech Plc and Microbot Medical

0.54

Correlation Coefficient

Playtech Plc  Microbot Medical

Very weak diversification

The 3 months correlation between Playtech and Microbot is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and Playtech Plc 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 Playtech plc 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 Playtech Plc i.e., Playtech Plc and Microbot Medical go up and down completely randomly.

Pair Corralation between Playtech Plc and Microbot Medical

Assuming the 90 days horizon Playtech plc is expected to generate 0.96 times more return on investment than Microbot Medical. However, Playtech plc is 1.05 times less risky than Microbot Medical. It trades about 0.12 of its potential returns per unit of risk. Microbot Medical is currently generating about 0.02 per unit of risk. If you would invest  782.00  in Playtech plc on September 13, 2024 and sell it today you would earn a total of  161.00  from holding Playtech plc or generate 20.59% return on investment over 90 days.

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

Playtech plc  vs.  Microbot Medical

Playtech plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental indicators, Playtech Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Microbot Medical

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Microbot Medical is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Playtech Plc and Microbot Medical

The main advantage of trading using opposite Playtech Plc and Microbot Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc 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 Playtech plc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.