Correlation Between Kamada and ATT
Can any of the company-specific risk be diversified away by investing in both Kamada and ATT 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 Kamada and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kamada and ATT Inc, you can compare the effects of market volatilities on Kamada and ATT 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 Kamada with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kamada and ATT.
Diversification Opportunities for Kamada and ATT
Weak diversification
The 3 months correlation between Kamada and ATT is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Kamada and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Kamada 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 Kamada are associated (or correlated) with ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Kamada i.e., Kamada and ATT go up and down completely randomly.
Pair Corralation between Kamada and ATT
Assuming the 90 days trading horizon Kamada is expected to under-perform the ATT. In addition to that, Kamada is 1.38 times more volatile than ATT Inc. It trades about -0.39 of its total potential returns per unit of risk. ATT Inc is currently generating about -0.09 per unit of volatility. If you would invest 1,684 in ATT Inc on January 24, 2024 and sell it today you would lose (34.00) from holding ATT Inc or give up 2.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Kamada vs. ATT Inc
Performance |
| Timeline |
| Kamada |
| ATT Inc |
Kamada and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kamada and ATT
The main advantage of trading using opposite Kamada and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kamada position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.The idea behind Kamada and ATT Inc 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Global Correlations Find global opportunities by holding instruments from different markets |