Correlation Between Kamada and Teva Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Kamada and Teva Pharmaceutical 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 Kamada and Teva Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kamada and Teva Pharmaceutical Industries, you can compare the effects of market volatilities on Kamada and Teva Pharmaceutical 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 Kamada with a short position of Teva Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kamada and Teva Pharmaceutical.
Diversification Opportunities for Kamada and Teva Pharmaceutical
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kamada and Teva is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Kamada and Teva Pharmaceutical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharmaceutical and Kamada 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 Kamada are associated (or correlated) with Teva Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharmaceutical has no effect on the direction of Kamada i.e., Kamada and Teva Pharmaceutical go up and down completely randomly.
Pair Corralation between Kamada and Teva Pharmaceutical
Assuming the 90 days trading horizon Kamada is expected to generate 2.01 times less return on investment than Teva Pharmaceutical. But when comparing it to its historical volatility, Kamada is 1.08 times less risky than Teva Pharmaceutical. It trades about 0.05 of its potential returns per unit of risk. Teva Pharmaceutical Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 298,500 in Teva Pharmaceutical Industries on August 26, 2024 and sell it today you would earn a total of 335,500 from holding Teva Pharmaceutical Industries or generate 112.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kamada vs. Teva Pharmaceutical Industries
Performance |
| Timeline |
| Kamada |
| Teva Pharmaceutical |
Kamada and Teva Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kamada and Teva Pharmaceutical
The main advantage of trading using opposite Kamada and Teva Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kamada position performs unexpectedly, Teva Pharmaceutical 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 Teva Pharmaceutical will offset losses from the drop in Teva Pharmaceutical's long position.| Kamada vs. Kamada | Kamada vs. Teva Pharmaceutical Industries | Kamada vs. Tower Semiconductor | Kamada vs. Elbit Systems |
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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 the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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