Correlation Between Rockwell Medical and Kamada

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

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

Diversification Opportunities for Rockwell Medical and Kamada

-0.47

Correlation Coefficient

Rockwell Medical  Kamada

Very good diversification

The 3 months correlation between Rockwell and Kamada is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Rockwell Medical and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada and Rockwell Medical 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 Rockwell Medical 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 Rockwell Medical i.e., Rockwell Medical and Kamada go up and down completely randomly.

Pair Corralation between Rockwell Medical and Kamada

Given the investment horizon of 90 days Rockwell Medical is expected to generate 2.09 times more return on investment than Kamada. However, Rockwell Medical is 2.09 times more volatile than Kamada. It trades about 0.1 of its potential returns per unit of risk. Kamada is currently generating about 0.2 per unit of risk. If you would invest  218.00  in Rockwell Medical on October 6, 2024 and sell it today you would earn a total of  15.00  from holding Rockwell Medical or generate 6.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Rockwell Medical  vs.  Kamada

Rockwell Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rockwell Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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.

Pair Trading with Rockwell Medical and Kamada

The main advantage of trading using opposite Rockwell Medical and Kamada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockwell Medical 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 Rockwell Medical 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.