Correlation Between AstraZeneca PLC and Grifols SA

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

By analyzing existing cross correlation between AstraZeneca PLC ADR and Grifols SA ADR, you can compare the effects of market volatilities on AstraZeneca PLC and Grifols SA 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 AstraZeneca PLC with a short position of Grifols SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstraZeneca PLC and Grifols SA.

Diversification Opportunities for AstraZeneca PLC and Grifols SA

0.59

Correlation Coefficient

AstraZeneca PLC  Grifols SA

Very weak diversification

The 3 months correlation between AstraZeneca and Grifols is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC ADR and Grifols SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grifols SA ADR and AstraZeneca PLC 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 AstraZeneca PLC ADR are associated (or correlated) with Grifols SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grifols SA ADR has no effect on the direction of AstraZeneca PLC i.e., AstraZeneca PLC and Grifols SA go up and down completely randomly.

Pair Corralation between AstraZeneca PLC and Grifols SA

Considering the 90-day investment horizon AstraZeneca PLC ADR is expected to generate 0.43 times more return on investment than Grifols SA. However, AstraZeneca PLC ADR is 2.35 times less risky than Grifols SA. It trades about 0.19 of its potential returns per unit of risk. Grifols SA ADR is currently generating about 0.0 per unit of risk. If you would invest  6,466  in AstraZeneca PLC ADR on December 29, 2024 and sell it today you would earn a total of  913.00  from holding AstraZeneca PLC ADR or generate 14.12% return on investment over 90 days.

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

AstraZeneca PLC ADR  vs.  Grifols SA ADR

AstraZeneca PLC ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AstraZeneca PLC ADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, AstraZeneca PLC displayed solid returns over the last few months and may actually be approaching a breakup point.

Grifols SA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grifols SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Grifols SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AstraZeneca PLC and Grifols SA

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

The idea behind AstraZeneca PLC ADR and Grifols SA ADR 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..