Correlation Between Catalent and Microbot Medical

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

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

Diversification Opportunities for Catalent and Microbot Medical

0.29

Correlation Coefficient

Catalent  Microbot Medical

Modest diversification

The 3 months correlation between Catalent and Microbot is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and Catalent 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 Catalent 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 Catalent i.e., Catalent and Microbot Medical go up and down completely randomly.

Pair Corralation between Catalent and Microbot Medical

Given the investment horizon of 90 days Catalent is expected to generate 0.08 times more return on investment than Microbot Medical. However, Catalent is 11.83 times less risky than Microbot Medical. It trades about 0.0 of its potential returns per unit of risk. Microbot Medical is currently generating about -0.01 per unit of risk. If you would invest  5,650  in Catalent on March 12, 2024 and sell it today you would lose (11.00) from holding Catalent or give up 0.19% of portfolio value over 90 days.

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

Catalent  vs.  Microbot Medical

Catalent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Catalent is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Microbot Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Microbot Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Microbot Medical is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Catalent and Microbot Medical

The main advantage of trading using opposite Catalent and Microbot Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent 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 Catalent 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.

Check out your portfolio center.

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.