Correlation Between Kamada and Eagle Pharmaceuticals

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

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

Diversification Opportunities for Kamada and Eagle Pharmaceuticals

-0.4

Correlation Coefficient

Kamada  Eagle Pharmaceuticals

Very good diversification

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

Pair Corralation between Kamada and Eagle Pharmaceuticals

Given the investment horizon of 90 days Kamada is expected to generate 0.17 times more return on investment than Eagle Pharmaceuticals. However, Kamada is 5.86 times less risky than Eagle Pharmaceuticals. It trades about 0.07 of its potential returns per unit of risk. Eagle Pharmaceuticals is currently generating about -0.33 per unit of risk. If you would invest  545.00  in Kamada on August 31, 2024 and sell it today you would earn a total of  36.00  from holding Kamada or generate 6.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	38.1%
Values	Daily Returns

Kamada  vs.  Eagle Pharmaceuticals

Kamada

Risk-Adjusted Performance

5 of 100

Modest

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 unfluctuating fundamental indicators, Kamada may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Eagle Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kamada and Eagle Pharmaceuticals

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

The idea behind Kamada and Eagle Pharmaceuticals 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.