Correlation Between Microbot Medical and Definitive Healthcare

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

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

Diversification Opportunities for Microbot Medical and Definitive Healthcare

0.77

Correlation Coefficient

Microbot Medical  Definitive Healthcare

Poor diversification

The 3 months correlation between Microbot and Definitive is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and Definitive Healthcare Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definitive Healthcare 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 Definitive Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definitive Healthcare has no effect on the direction of Microbot Medical i.e., Microbot Medical and Definitive Healthcare go up and down completely randomly.

Pair Corralation between Microbot Medical and Definitive Healthcare

Given the investment horizon of 90 days Microbot Medical is expected to under-perform the Definitive Healthcare. In addition to that, Microbot Medical is 1.41 times more volatile than Definitive Healthcare Corp. It trades about -0.38 of its total potential returns per unit of risk. Definitive Healthcare Corp is currently generating about -0.23 per unit of volatility. If you would invest  807.00  in Definitive Healthcare Corp on January 28, 2024 and sell it today you would lose (108.00) from holding Definitive Healthcare Corp or give up 13.38% of portfolio value over 90 days.

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

Microbot Medical  vs.  Definitive Healthcare Corp

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

Definitive Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Definitive Healthcare Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Microbot Medical and Definitive Healthcare

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

The idea behind Microbot Medical and Definitive Healthcare Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.