Correlation Between Grifols SA and Solaria Energa

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

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

Diversification Opportunities for Grifols SA and Solaria Energa

0.26

Correlation Coefficient

Grifols SA  Solaria Energa

Modest diversification

The 3 months correlation between Grifols and Solaria is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Grifols SA and Solaria Energa y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solaria Energa y 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 Solaria Energa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solaria Energa y has no effect on the direction of Grifols SA i.e., Grifols SA and Solaria Energa go up and down completely randomly.

Pair Corralation between Grifols SA and Solaria Energa

Assuming the 90 days trading horizon Grifols SA is expected to generate 1.17 times more return on investment than Solaria Energa. However, Grifols SA is 1.17 times more volatile than Solaria Energa y. It trades about -0.03 of its potential returns per unit of risk. Solaria Energa y is currently generating about -0.05 per unit of risk. If you would invest  918.00  in Grifols SA on December 30, 2024 and sell it today you would lose (60.00) from holding Grifols SA or give up 6.54% of portfolio value over 90 days.

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

Grifols SA  vs.  Solaria Energa y

Grifols SA

Risk-Adjusted Performance

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 rather sound technical and fundamental indicators, Grifols SA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Solaria Energa y

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solaria Energa y 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 Solaria Energa

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

The idea behind Grifols SA and Solaria Energa y 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.