Correlation Between ICL Israel and Kamada

Can any of the company-specific risk be diversified away by investing in both ICL Israel 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 ICL Israel and Kamada into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ICL Israel Chemicals and Kamada, you can compare the effects of market volatilities on ICL Israel 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 ICL Israel with a short position of Kamada. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Kamada.

Diversification Opportunities for ICL Israel and Kamada

0.59

Correlation Coefficient

ICL Israel  Kamada

Very weak diversification

The 3 months correlation between ICL and Kamada is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada and ICL Israel 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 ICL Israel Chemicals 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 ICL Israel i.e., ICL Israel and Kamada go up and down completely randomly.

Pair Corralation between ICL Israel and Kamada

Assuming the 90 days trading horizon ICL Israel Chemicals is expected to generate 1.64 times more return on investment than Kamada. However, ICL Israel is 1.64 times more volatile than Kamada. It trades about 0.18 of its potential returns per unit of risk. Kamada is currently generating about 0.07 per unit of risk. If you would invest  148,553  in ICL Israel Chemicals on September 16, 2024 and sell it today you would earn a total of  34,847  from holding ICL Israel Chemicals or generate 23.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

ICL Israel Chemicals  vs.  Kamada

ICL Israel Chemicals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ICL Israel Chemicals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, ICL Israel sustained solid returns over the last few months and may actually be approaching a breakup point.

Kamada

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kamada are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kamada may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ICL Israel and Kamada

The main advantage of trading using opposite ICL Israel and Kamada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel 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 ICL Israel Chemicals 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.