Correlation Between Grifols SA and CIE Automotive

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

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

Diversification Opportunities for Grifols SA and CIE Automotive

-0.51

Correlation Coefficient

Grifols SA  CIE Automotive

Excellent diversification

The 3 months correlation between Grifols and CIE is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Grifols SA and CIE Automotive SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIE Automotive SA 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 CIE Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIE Automotive SA has no effect on the direction of Grifols SA i.e., Grifols SA and CIE Automotive go up and down completely randomly.

Pair Corralation between Grifols SA and CIE Automotive

Assuming the 90 days trading horizon Grifols SA is expected to under-perform the CIE Automotive. In addition to that, Grifols SA is 3.05 times more volatile than CIE Automotive SA. It trades about 0.0 of its total potential returns per unit of risk. CIE Automotive SA is currently generating about 0.0 per unit of volatility. 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

Grifols SA  vs.  CIE Automotive SA

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.

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.

Pair Trading with Grifols SA and CIE Automotive

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

The idea behind Grifols SA and CIE Automotive 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.