Correlation Between Grifols SA and Acerinox

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

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

Diversification Opportunities for Grifols SA and Acerinox

-0.59

Correlation Coefficient

Grifols SA  Acerinox

Excellent diversification

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

Pair Corralation between Grifols SA and Acerinox

Assuming the 90 days trading horizon Grifols SA is expected to under-perform the Acerinox. In addition to that, Grifols SA is 1.57 times more volatile than Acerinox. It trades about -0.07 of its total potential returns per unit of risk. Acerinox is currently generating about 0.09 per unit of volatility. If you would invest  885.00  in Acerinox on October 26, 2024 and sell it today you would earn a total of  91.00  from holding Acerinox or generate 10.28% return on investment over 90 days.

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

Grifols SA  vs.  Acerinox

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.

Acerinox

Risk-Adjusted Performance

7 of 100

Modest

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

Pair Trading with Grifols SA and Acerinox

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

The idea behind Grifols SA and Acerinox 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.