Correlation Between Teva Pharmaceutical and Kamada
Can any of the company-specific risk be diversified away by investing in both Teva Pharmaceutical 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 Teva Pharmaceutical and Kamada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teva Pharmaceutical Industries and Kamada, you can compare the effects of market volatilities on Teva Pharmaceutical 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 Teva Pharmaceutical with a short position of Kamada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teva Pharmaceutical and Kamada.
Diversification Opportunities for Teva Pharmaceutical and Kamada
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Teva and Kamada is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharmaceutical Industries and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada and Teva Pharmaceutical 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 Teva Pharmaceutical 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 Teva Pharmaceutical i.e., Teva Pharmaceutical and Kamada go up and down completely randomly.
Pair Corralation between Teva Pharmaceutical and Kamada
Assuming the 90 days trading horizon Teva Pharmaceutical Industries is expected to generate 1.08 times more return on investment than Kamada. However, Teva Pharmaceutical is 1.08 times more volatile than Kamada. It trades about 0.09 of its potential returns per unit of risk. Kamada is currently generating about 0.05 per unit of risk. If you would invest 298,500 in Teva Pharmaceutical Industries on August 25, 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 |
Teva Pharmaceutical Industries vs. Kamada
Performance |
| Timeline |
| Teva Pharmaceutical |
| Kamada |
Teva Pharmaceutical and Kamada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teva Pharmaceutical and Kamada
The main advantage of trading using opposite Teva Pharmaceutical and Kamada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teva Pharmaceutical 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.| Teva Pharmaceutical vs. Bezeq Israeli Telecommunication | Teva Pharmaceutical vs. El Al Israel | Teva Pharmaceutical vs. Bank Leumi Le Israel | Teva Pharmaceutical vs. Elbit Systems |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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