Correlation Between Israel Opportunity and Kamada
Can any of the company-specific risk be diversified away by investing in both Israel Opportunity 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 Israel Opportunity and Kamada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Opportunity and Kamada, you can compare the effects of market volatilities on Israel Opportunity 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 Israel Opportunity with a short position of Kamada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Opportunity and Kamada.
Diversification Opportunities for Israel Opportunity and Kamada
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Israel and Kamada is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Israel Opportunity and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada and Israel Opportunity 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 Israel Opportunity 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 Israel Opportunity i.e., Israel Opportunity and Kamada go up and down completely randomly.
Pair Corralation between Israel Opportunity and Kamada
Assuming the 90 days trading horizon Israel Opportunity is expected to generate 1.72 times more return on investment than Kamada. However, Israel Opportunity is 1.72 times more volatile than Kamada. It trades about 0.08 of its potential returns per unit of risk. Kamada is currently generating about 0.02 per unit of risk. If you would invest 9,440 in Israel Opportunity on November 28, 2024 and sell it today you would earn a total of 560.00 from holding Israel Opportunity or generate 5.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Opportunity vs. Kamada
Performance |
| Timeline |
| Israel Opportunity |
| Kamada |
Israel Opportunity and Kamada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Opportunity and Kamada
The main advantage of trading using opposite Israel Opportunity and Kamada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Opportunity 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.| Israel Opportunity vs. ICL Israel Chemicals | Israel Opportunity vs. Amanet Management Systems | Israel Opportunity vs. One Software Technologies | Israel Opportunity vs. Arad Investment Industrial |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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