Correlation Between Johnson Johnson and Kamada

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

Diversification Opportunities for Johnson Johnson and Kamada

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Johnson and Kamada is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada and Johnson Johnson 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 Johnson Johnson 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 Johnson Johnson i.e., Johnson Johnson and Kamada go up and down completely randomly.

Pair Corralation between Johnson Johnson and Kamada

Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Kamada. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 3.61 times less risky than Kamada. The stock trades about -0.26 of its potential returns per unit of risk. The Kamada is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  469.00  in Kamada on November 2, 2022 and sell it today you would lose (9.52)  from holding Kamada or give up 2.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Johnson Johnson  vs.  Kamada

 Performance (%) 
       Timeline  
Johnson Johnson 
Johnson Performance
0 of 100
Over the last 90 days Johnson Johnson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Johnson Johnson is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Johnson Price Channel

Kamada 
Kamada Performance
0 of 100
Over the last 90 days Kamada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Kamada is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kamada Price Channel

Johnson Johnson and Kamada Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Johnson Johnson and Kamada

The main advantage of trading using opposite Johnson Johnson and Kamada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson 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.
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The idea behind Johnson Johnson 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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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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