Correlation Between Phibro Animal and Kamada

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

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

Diversification Opportunities for Phibro Animal and Kamada

0.16

Correlation Coefficient

Phibro Animal  Kamada

Average diversification

The 3 months correlation between Phibro and Kamada is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Phibro Animal Health and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada and Phibro Animal 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 Phibro Animal Health 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 Phibro Animal i.e., Phibro Animal and Kamada go up and down completely randomly.

Pair Corralation between Phibro Animal and Kamada

Given the investment horizon of 90 days Phibro Animal Health is expected to under-perform the Kamada. In addition to that, Phibro Animal is 1.03 times more volatile than Kamada. It trades about -0.02 of its total potential returns per unit of risk. Kamada is currently generating about 0.13 per unit of volatility. If you would invest  589.00  in Kamada on November 28, 2024 and sell it today you would earn a total of  134.00  from holding Kamada or generate 22.75% return on investment over 90 days.

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

Phibro Animal Health  vs.  Kamada

Phibro Animal Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Phibro Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Phibro Animal is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Kamada

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kamada are ranked lower than 10 (%) 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.

Pair Trading with Phibro Animal and Kamada

The main advantage of trading using opposite Phibro Animal and Kamada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phibro Animal 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 Phibro Animal Health 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.