Correlation Between Microbot Medical and ORMAT TECHNOLOGIES

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

Diversification Opportunities for Microbot Medical and ORMAT TECHNOLOGIES

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Microbot and ORMAT is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORMAT TECHNOLOGIES has no effect on the direction of Microbot Medical i.e., Microbot Medical and ORMAT TECHNOLOGIES go up and down completely randomly.

Pair Corralation between Microbot Medical and ORMAT TECHNOLOGIES

Assuming the 90 days trading horizon Microbot Medical is expected to generate 2.15 times more return on investment than ORMAT TECHNOLOGIES. However, Microbot Medical is 2.15 times more volatile than ORMAT TECHNOLOGIES. It trades about 0.13 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about 0.2 per unit of risk. If you would invest  85.00  in Microbot Medical on September 3, 2024 and sell it today you would earn a total of  6.00  from holding Microbot Medical or generate 7.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Microbot Medical  vs.  ORMAT TECHNOLOGIES

 Performance 
       Timeline  
Microbot Medical 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 7 (%) 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.
ORMAT TECHNOLOGIES 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in ORMAT TECHNOLOGIES are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, ORMAT TECHNOLOGIES unveiled solid returns over the last few months and may actually be approaching a breakup point.

Microbot Medical and ORMAT TECHNOLOGIES Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microbot Medical and ORMAT TECHNOLOGIES

The main advantage of trading using opposite Microbot Medical and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microbot Medical position performs unexpectedly, ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES will offset losses from the drop in ORMAT TECHNOLOGIES's long position.
The idea behind Microbot Medical and ORMAT TECHNOLOGIES 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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