Correlation Between CbdMD and Kamada

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

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

Diversification Opportunities for CbdMD and Kamada

-0.31

Correlation Coefficient

CbdMD  Kamada

Very good diversification

The 3 months correlation between CbdMD and Kamada is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding cbdMD Inc and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada and CbdMD 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 cbdMD Inc 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 CbdMD i.e., CbdMD and Kamada go up and down completely randomly.

Pair Corralation between CbdMD and Kamada

Assuming the 90 days trading horizon cbdMD Inc is expected to generate 3.29 times more return on investment than Kamada. However, CbdMD is 3.29 times more volatile than Kamada. It trades about 0.26 of its potential returns per unit of risk. Kamada is currently generating about 0.17 per unit of risk. If you would invest  71.00  in cbdMD Inc on October 5, 2024 and sell it today you would earn a total of  23.00  from holding cbdMD Inc or generate 32.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

cbdMD Inc  vs.  Kamada

cbdMD Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in cbdMD Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, CbdMD sustained solid returns over the last few months and may actually be approaching a breakup point.

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 CbdMD and Kamada

The main advantage of trading using opposite CbdMD and Kamada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CbdMD 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 cbdMD Inc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.