Correlation Between Kamada and Durect

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

By analyzing existing cross correlation between Kamada and Durect, you can compare the effects of market volatilities on Kamada and Durect 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 Durect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kamada and Durect.

Diversification Opportunities for Kamada and Durect

0.2

Correlation Coefficient

Kamada  Durect

Modest diversification

The 3 months correlation between Kamada and Durect is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kamada and Durect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Durect 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 Durect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Durect has no effect on the direction of Kamada i.e., Kamada and Durect go up and down completely randomly.

Pair Corralation between Kamada and Durect

Given the investment horizon of 90 days Kamada is expected to generate 0.32 times more return on investment than Durect. However, Kamada is 3.16 times less risky than Durect. It trades about -0.21 of its potential returns per unit of risk. Durect is currently generating about -0.11 per unit of risk. If you would invest  561.00  in Kamada on January 30, 2024 and sell it today you would lose (46.00) from holding Kamada or give up 8.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kamada  vs.  Durect

Kamada

Risk-Adjusted Performance

0 of 100

Very Weak

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Durect

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Durect are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Durect showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kamada and Durect

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

The idea behind Kamada and Durect 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.