Correlation Between Kamada and INC Research

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

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

Diversification Opportunities for Kamada and INC Research

-0.55

Correlation Coefficient

Kamada  INC Research

Excellent diversification

The 3 months correlation between Kamada and INC is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Kamada and INC Research Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INC Research Holdings 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 INC Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INC Research Holdings has no effect on the direction of Kamada i.e., Kamada and INC Research go up and down completely randomly.

Pair Corralation between Kamada and INC Research

Given the investment horizon of 90 days Kamada is expected to generate 2.28 times less return on investment than INC Research. But when comparing it to its historical volatility, Kamada is 3.28 times less risky than INC Research. It trades about 0.17 of its potential returns per unit of risk. INC Research Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  148.00  in INC Research Holdings on October 5, 2024 and sell it today you would earn a total of  18.00  from holding INC Research Holdings or generate 12.16% 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.  INC Research Holdings

Kamada

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kamada are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Kamada sustained solid returns over the last few months and may actually be approaching a breakup point.

INC Research Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INC Research Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, INC Research is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Kamada and INC Research

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

The idea behind Kamada and INC Research Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.