Correlation Between Israel Corp and Kamada

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

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

Diversification Opportunities for Israel Corp and Kamada

0.67

Correlation Coefficient

Israel Corp  Kamada

Poor diversification

The 3 months correlation between Israel and Kamada is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Israel Corp and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada and Israel Corp 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 Israel Corp 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 Israel Corp i.e., Israel Corp and Kamada go up and down completely randomly.

Pair Corralation between Israel Corp and Kamada

Assuming the 90 days trading horizon Israel Corp is expected to generate 2.03 times less return on investment than Kamada. But when comparing it to its historical volatility, Israel Corp is 1.73 times less risky than Kamada. It trades about 0.07 of its potential returns per unit of risk. Kamada is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  213,774  in Kamada on December 24, 2024 and sell it today you would earn a total of  32,326  from holding Kamada or generate 15.12% return on investment over 90 days.

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

Israel Corp  vs.  Kamada

Israel Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Israel Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kamada

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kamada are ranked lower than 6 (%) 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 Israel Corp and Kamada

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

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.