Correlation Between Kamada and Teva Pharmaceutical

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

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

Diversification Opportunities for Kamada and Teva Pharmaceutical

-0.4

Correlation Coefficient

Kamada  Teva Pharmaceutical

Very good diversification

The 3 months correlation between Kamada and Teva is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Kamada and Teva Pharmaceutical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharmaceutical 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 Teva Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharmaceutical has no effect on the direction of Kamada i.e., Kamada and Teva Pharmaceutical go up and down completely randomly.

Pair Corralation between Kamada and Teva Pharmaceutical

Assuming the 90 days trading horizon Kamada is expected to generate 0.91 times more return on investment than Teva Pharmaceutical. However, Kamada is 1.09 times less risky than Teva Pharmaceutical. It trades about 0.07 of its potential returns per unit of risk. Teva Pharmaceutical Industries is currently generating about -0.09 per unit of risk. If you would invest  204,000  in Kamada on September 13, 2024 and sell it today you would earn a total of  10,000  from holding Kamada or generate 4.9% return on investment over 90 days.

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

Kamada  vs.  Teva Pharmaceutical Industries

Kamada

Risk-Adjusted Performance

5 of 100

OK

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.

Teva Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teva Pharmaceutical Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Kamada and Teva Pharmaceutical

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

The idea behind Kamada and Teva Pharmaceutical Industries 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.