Correlation Between Industrias Bachoco and Microbot Medical

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

Diversification Opportunities for Industrias Bachoco and Microbot Medical

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Industrias and Microbot is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Industrias Bachoco SA and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and Industrias Bachoco 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 Industrias Bachoco SA 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 Industrias Bachoco i.e., Industrias Bachoco and Microbot Medical go up and down completely randomly.

Pair Corralation between Industrias Bachoco and Microbot Medical

Considering the 90-day investment horizon Industrias Bachoco SA is expected to generate 0.33 times more return on investment than Microbot Medical. However, Industrias Bachoco SA is 3.07 times less risky than Microbot Medical. It trades about 0.07 of its potential returns per unit of risk. Microbot Medical is currently generating about 0.02 per unit of risk. If you would invest  3,922  in Industrias Bachoco SA on August 31, 2022 and sell it today you would earn a total of  1,332  from holding Industrias Bachoco SA or generate 33.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Industrias Bachoco SA  vs.  Microbot Medical

 Performance (%) 
       Timeline  
Industrias Bachoco 
Industrias Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Industrias Bachoco SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish fundamental drivers, Industrias Bachoco may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Industrias Price Channel

Microbot Medical 
Microbot Performance
0 of 100
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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Microbot Price Channel

Industrias Bachoco and Microbot Medical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Industrias Bachoco and Microbot Medical

The main advantage of trading using opposite Industrias Bachoco and Microbot Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrias Bachoco 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.
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The idea behind Industrias Bachoco SA 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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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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