Correlation Between Aerodrome and Kamada

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Can any of the company-specific risk be diversified away by investing in both Aerodrome 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 Aerodrome and Kamada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerodrome Group and Kamada, you can compare the effects of market volatilities on Aerodrome 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 Aerodrome with a short position of Kamada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerodrome and Kamada.

Diversification Opportunities for Aerodrome and Kamada

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between Aerodrome and Kamada is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Aerodrome Group and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada and Aerodrome 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 Aerodrome Group 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 Aerodrome i.e., Aerodrome and Kamada go up and down completely randomly.

Pair Corralation between Aerodrome and Kamada

Assuming the 90 days trading horizon Aerodrome Group is expected to generate 2.65 times more return on investment than Kamada. However, Aerodrome is 2.65 times more volatile than Kamada. It trades about 0.01 of its potential returns per unit of risk. Kamada is currently generating about 0.02 per unit of risk. If you would invest  10,700  in Aerodrome Group on December 30, 2023 and sell it today you would lose (3,290) from holding Aerodrome Group or give up 30.75% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Aerodrome Group  vs.  Kamada

 Performance 
       Timeline  
Aerodrome Group 

Risk-Adjusted Performance

6 of 100

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

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Kamada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Aerodrome and Kamada Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aerodrome and Kamada

The main advantage of trading using opposite Aerodrome and Kamada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerodrome 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 Aerodrome Group 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.
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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