Correlation Between El Al and Kamada

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

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

Diversification Opportunities for El Al and Kamada

0.77

Correlation Coefficient

El Al  Kamada

Poor diversification

The 3 months correlation between ELAL and Kamada is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding El Al Israel and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada and El Al 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 El Al Israel 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 El Al i.e., El Al and Kamada go up and down completely randomly.

Pair Corralation between El Al and Kamada

Assuming the 90 days trading horizon El Al Israel is expected to generate 0.74 times more return on investment than Kamada. However, El Al Israel is 1.36 times less risky than Kamada. It trades about 0.27 of its potential returns per unit of risk. Kamada is currently generating about 0.1 per unit of risk. If you would invest  78,790  in El Al Israel on December 29, 2024 and sell it today you would earn a total of  41,010  from holding El Al Israel or generate 52.05% return on investment over 90 days.

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

El Al Israel  vs.  Kamada

El Al Israel

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in El Al Israel are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, El Al sustained solid returns over the last few months and may actually be approaching a breakup point.

Kamada

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kamada are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kamada sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with El Al and Kamada

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

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.