Correlation Between Grifols SA and Lleidanetworks Serveis

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

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

Diversification Opportunities for Grifols SA and Lleidanetworks Serveis

-0.02

Correlation Coefficient

Grifols SA  Lleidanetworks Serveis

Good diversification

The 3 months correlation between Grifols and Lleidanetworks is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Grifols SA and Lleidanetworks Serveis Telemat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lleidanetworks Serveis 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 Lleidanetworks Serveis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lleidanetworks Serveis has no effect on the direction of Grifols SA i.e., Grifols SA and Lleidanetworks Serveis go up and down completely randomly.

Pair Corralation between Grifols SA and Lleidanetworks Serveis

Assuming the 90 days trading horizon Grifols SA is expected to generate 0.81 times more return on investment than Lleidanetworks Serveis. However, Grifols SA is 1.24 times less risky than Lleidanetworks Serveis. It trades about 0.16 of its potential returns per unit of risk. Lleidanetworks Serveis Telematics is currently generating about 0.1 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.  Lleidanetworks Serveis Telemat

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.

Lleidanetworks Serveis

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lleidanetworks Serveis Telematics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Lleidanetworks Serveis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grifols SA and Lleidanetworks Serveis

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

The idea behind Grifols SA and Lleidanetworks Serveis Telematics 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.