Correlation Between Kamada and Lifecore Biomedical

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

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

Diversification Opportunities for Kamada and Lifecore Biomedical

-0.51

Correlation Coefficient

Kamada  Lifecore Biomedical

Excellent diversification

The 3 months correlation between Kamada and Lifecore is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kamada and Lifecore Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifecore Biomedical 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 Lifecore Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifecore Biomedical has no effect on the direction of Kamada i.e., Kamada and Lifecore Biomedical go up and down completely randomly.

Pair Corralation between Kamada and Lifecore Biomedical

Given the investment horizon of 90 days Kamada is expected to generate 0.81 times more return on investment than Lifecore Biomedical. However, Kamada is 1.23 times less risky than Lifecore Biomedical. It trades about 0.09 of its potential returns per unit of risk. Lifecore Biomedical is currently generating about -0.01 per unit of risk. If you would invest  582.00  in Kamada on December 29, 2024 and sell it today you would earn a total of  93.00  from holding Kamada or generate 15.98% 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.  Lifecore Biomedical

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 fundamental indicators, Kamada sustained solid returns over the last few months and may actually be approaching a breakup point.

Lifecore Biomedical

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Kamada and Lifecore Biomedical

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

The idea behind Kamada and Lifecore Biomedical 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.