Correlation Between Kamada and B Communications

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

By analyzing existing cross correlation between Kamada and B Communications, you can compare the effects of market volatilities on Kamada and B Communications 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 B Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kamada and B Communications.

Diversification Opportunities for Kamada and B Communications

0.71

Correlation Coefficient

Kamada  B Communications

Poor diversification

The 3 months correlation between Kamada and BCOM is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kamada and B Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Communications 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 B Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Communications has no effect on the direction of Kamada i.e., Kamada and B Communications go up and down completely randomly.

Pair Corralation between Kamada and B Communications

Assuming the 90 days trading horizon Kamada is expected to generate 9.17 times less return on investment than B Communications. But when comparing it to its historical volatility, Kamada is 1.71 times less risky than B Communications. It trades about 0.07 of its potential returns per unit of risk. B Communications is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  110,200  in B Communications on September 16, 2024 and sell it today you would earn a total of  66,900  from holding B Communications or generate 60.71% return on investment over 90 days.

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

Kamada  vs.  B Communications

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.

B Communications

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in B Communications are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, B Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kamada and B Communications

The main advantage of trading using opposite Kamada and B Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kamada position performs unexpectedly, B Communications 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 B Communications will offset losses from the drop in B Communications' long position.

The idea behind Kamada and B Communications 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.