Correlation Between C Mer and Kamada
Can any of the company-specific risk be diversified away by investing in both C Mer and Kamada 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 C Mer and Kamada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between C Mer Industries and Kamada, you can compare the effects of market volatilities on C Mer and Kamada 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 C Mer with a short position of Kamada. Check out your portfolio center. Please also check ongoing floating volatility patterns of C Mer and Kamada.
Diversification Opportunities for C Mer and Kamada
Poor diversification
The 3 months correlation between CMER and Kamada is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding C Mer Industries and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada and C Mer 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 C Mer Industries are associated (or correlated) with Kamada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kamada has no effect on the direction of C Mer i.e., C Mer and Kamada go up and down completely randomly.
Pair Corralation between C Mer and Kamada
Assuming the 90 days trading horizon C Mer is expected to generate 1.3 times less return on investment than Kamada. But when comparing it to its historical volatility, C Mer Industries is 1.19 times less risky than Kamada. It trades about 0.41 of its potential returns per unit of risk. Kamada is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 221,500 in Kamada on October 21, 2024 and sell it today you would earn a total of 39,000 from holding Kamada or generate 17.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
C Mer Industries vs. Kamada
Performance |
| Timeline |
| C Mer Industries |
| Kamada |
C Mer and Kamada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with C Mer and Kamada
The main advantage of trading using opposite C Mer and Kamada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C Mer position performs unexpectedly, Kamada 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 Kamada will offset losses from the drop in Kamada's long position.The idea behind C Mer Industries and Kamada 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.| Kamada vs. Kamada | Kamada vs. Teva Pharmaceutical Industries | Kamada vs. Tower Semiconductor | Kamada vs. Elbit Systems |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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