Correlation Between Enlight Renewable and Kamada

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

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

Diversification Opportunities for Enlight Renewable and Kamada

0.14

Correlation Coefficient

Enlight Renewable  Kamada

Average diversification

The 3 months correlation between Enlight and Kamada is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Enlight Renewable Energy and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada and Enlight Renewable 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 Enlight Renewable Energy 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 Enlight Renewable i.e., Enlight Renewable and Kamada go up and down completely randomly.

Pair Corralation between Enlight Renewable and Kamada

Assuming the 90 days trading horizon Enlight Renewable Energy is expected to under-perform the Kamada. But the stock apears to be less risky and, when comparing its historical volatility, Enlight Renewable Energy is 2.0 times less risky than Kamada. The stock trades about -0.02 of its potential returns per unit of risk. The Kamada is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  210,762  in Kamada on December 30, 2024 and sell it today you would earn a total of  42,638  from holding Kamada or generate 20.23% return on investment over 90 days.

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

Enlight Renewable Energy  vs.  Kamada

Enlight Renewable Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enlight Renewable Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Enlight Renewable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 Enlight Renewable and Kamada

The main advantage of trading using opposite Enlight Renewable and Kamada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enlight Renewable 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 Enlight Renewable Energy 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.