Correlation Between Teva Pharma and Kambi Group

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

By analyzing existing cross correlation between Teva Pharma Industries and Kambi Group plc, you can compare the effects of market volatilities on Teva Pharma and Kambi Group 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 Teva Pharma with a short position of Kambi Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teva Pharma and Kambi Group.

Diversification Opportunities for Teva Pharma and Kambi Group

-0.62

Correlation Coefficient

Teva Pharma  Kambi Group

Excellent diversification

The 3 months correlation between Teva and Kambi is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharma Industries and Kambi Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kambi Group plc and Teva Pharma 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 Teva Pharma Industries are associated (or correlated) with Kambi Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kambi Group plc has no effect on the direction of Teva Pharma i.e., Teva Pharma and Kambi Group go up and down completely randomly.

Pair Corralation between Teva Pharma and Kambi Group

Given the investment horizon of 90 days Teva Pharma Industries is expected to generate 1.34 times more return on investment than Kambi Group. However, Teva Pharma is 1.34 times more volatile than Kambi Group plc. It trades about 0.08 of its potential returns per unit of risk. Kambi Group plc is currently generating about -0.12 per unit of risk. If you would invest  1,815  in Teva Pharma Industries on October 15, 2024 and sell it today you would earn a total of  279.00  from holding Teva Pharma Industries or generate 15.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Teva Pharma Industries  vs.  Kambi Group plc

Teva Pharma Industries

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Teva Pharma Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Teva Pharma sustained solid returns over the last few months and may actually be approaching a breakup point.

Kambi Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kambi Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Teva Pharma and Kambi Group

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

The idea behind Teva Pharma Industries and Kambi Group plc 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.