Correlation Between CIE Automotive and Grifols SA

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

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

Diversification Opportunities for CIE Automotive and Grifols SA

-0.48

Correlation Coefficient

CIE Automotive  Grifols SA

Very good diversification

The 3 months correlation between CIE and Grifols is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding CIE Automotive SA and Grifols SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grifols SA and CIE Automotive 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 CIE Automotive SA 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 has no effect on the direction of CIE Automotive i.e., CIE Automotive and Grifols SA go up and down completely randomly.

Pair Corralation between CIE Automotive and Grifols SA

Assuming the 90 days trading horizon CIE Automotive SA is expected to generate 0.33 times more return on investment than Grifols SA. However, CIE Automotive SA is 3.05 times less risky than Grifols SA. It trades about 0.0 of its potential returns per unit of risk. Grifols SA is currently generating about 0.0 per unit of risk. If you would invest  2,670  in CIE Automotive SA on October 26, 2024 and sell it today you would lose (75.00) from holding CIE Automotive SA or give up 2.81% of portfolio value over 90 days.

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

CIE Automotive SA  vs.  Grifols SA

CIE Automotive SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CIE Automotive SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, CIE Automotive may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Grifols SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grifols SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with CIE Automotive and Grifols SA

The main advantage of trading using opposite CIE Automotive and Grifols SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIE Automotive 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 CIE Automotive SA and Grifols SA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.