Correlation Between BioLife Solutions and Microbot Medical

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

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

Diversification Opportunities for BioLife Solutions and Microbot Medical

-0.21

Correlation Coefficient

BioLife Solutions  Microbot Medical

Very good diversification

The 3 months correlation between BioLife and Microbot is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BioLife Solutions and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and BioLife Solutions 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 BioLife Solutions 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 BioLife Solutions i.e., BioLife Solutions and Microbot Medical go up and down completely randomly.

Pair Corralation between BioLife Solutions and Microbot Medical

Given the investment horizon of 90 days BioLife Solutions is expected to generate 0.84 times more return on investment than Microbot Medical. However, BioLife Solutions is 1.19 times less risky than Microbot Medical. It trades about 0.13 of its potential returns per unit of risk. Microbot Medical is currently generating about -0.09 per unit of risk. If you would invest  1,702  in BioLife Solutions on March 5, 2024 and sell it today you would earn a total of  446.00  from holding BioLife Solutions or generate 26.2% return on investment over 90 days.

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

BioLife Solutions  vs.  Microbot Medical

BioLife Solutions

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BioLife Solutions are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, BioLife Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BioLife Solutions and Microbot Medical

The main advantage of trading using opposite BioLife Solutions and Microbot Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioLife Solutions 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 BioLife Solutions 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.