Correlation Between Kamada and Ilex Medical

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

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

Diversification Opportunities for Kamada and Ilex Medical

0.28

Correlation Coefficient

Kamada  Ilex Medical

Modest diversification

The 3 months correlation between Kamada and Ilex is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kamada and Ilex Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ilex Medical 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 Ilex Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ilex Medical has no effect on the direction of Kamada i.e., Kamada and Ilex Medical go up and down completely randomly.

Pair Corralation between Kamada and Ilex Medical

Assuming the 90 days trading horizon Kamada is expected to generate 4.22 times less return on investment than Ilex Medical. But when comparing it to its historical volatility, Kamada is 1.47 times less risky than Ilex Medical. It trades about 0.05 of its potential returns per unit of risk. Ilex Medical is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  674,900  in Ilex Medical on August 30, 2024 and sell it today you would earn a total of  95,400  from holding Ilex Medical or generate 14.14% return on investment over 90 days.

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

Kamada  vs.  Ilex Medical

Kamada

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kamada are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kamada is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ilex Medical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ilex Medical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ilex Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kamada and Ilex Medical

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

The idea behind Kamada and Ilex Medical 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.