Correlation Between Kamada and Elbit Systems
Can any of the company-specific risk be diversified away by investing in both Kamada and Elbit Systems 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 Elbit Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kamada and Elbit Systems, you can compare the effects of market volatilities on Kamada and Elbit Systems 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 Elbit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kamada and Elbit Systems.
Diversification Opportunities for Kamada and Elbit Systems
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kamada and Elbit is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Kamada and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems 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 Elbit Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Systems has no effect on the direction of Kamada i.e., Kamada and Elbit Systems go up and down completely randomly.
Pair Corralation between Kamada and Elbit Systems
Given the investment horizon of 90 days Kamada is expected to under-perform the Elbit Systems. But the stock apears to be less risky and, when comparing its historical volatility, Kamada is 1.24 times less risky than Elbit Systems. The stock trades about -0.09 of its potential returns per unit of risk. The Elbit Systems is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 8,834,000 in Elbit Systems on September 18, 2024 and sell it today you would earn a total of 568,000 from holding Elbit Systems or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 80.95% |
| Values | Daily Returns |
Kamada vs. Elbit Systems
Performance |
| Timeline |
| Kamada |
| Elbit Systems |
Kamada and Elbit Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kamada and Elbit Systems
The main advantage of trading using opposite Kamada and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kamada position performs unexpectedly, Elbit Systems 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 Elbit Systems will offset losses from the drop in Elbit Systems' long position.| Kamada vs. Lifecore Biomedical | Kamada vs. Shuttle Pharmaceuticals | Kamada vs. Cumberland Pharmaceuticals | Kamada vs. Ironwood Pharmaceuticals |
| Elbit Systems vs. Nice | Elbit Systems vs. Bank Leumi Le Israel | Elbit Systems vs. Teva Pharmaceutical Industries | Elbit Systems vs. Bank Hapoalim |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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