Correlation Between Grifols SA and Industria

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

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

Diversification Opportunities for Grifols SA and Industria

-0.13

Correlation Coefficient

Grifols SA  Industria

Good diversification

The 3 months correlation between Grifols and Industria is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Grifols SA and Industria de Diseno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industria de Diseno 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 Industria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industria de Diseno has no effect on the direction of Grifols SA i.e., Grifols SA and Industria go up and down completely randomly.

Pair Corralation between Grifols SA and Industria

Assuming the 90 days trading horizon Grifols SA is expected to generate 1.72 times more return on investment than Industria. However, Grifols SA is 1.72 times more volatile than Industria de Diseno. It trades about 0.16 of its potential returns per unit of risk. Industria de Diseno is currently generating about -0.08 per unit of risk. If you would invest  863.00  in Grifols SA on December 4, 2024 and sell it today you would earn a total of  237.00  from holding Grifols SA or generate 27.46% return on investment over 90 days.

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

Grifols SA  vs.  Industria de Diseno

Grifols SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grifols SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Grifols SA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Industria de Diseno

Risk-Adjusted Performance

Very Weak

Over the last 90 days Industria de Diseno has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic 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 Grifols SA and Industria

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

The idea behind Grifols SA and Industria de Diseno 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.