Correlation Between Lleidanetworks Serveis and Grifols SA

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

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

Diversification Opportunities for Lleidanetworks Serveis and Grifols SA

0.32

Correlation Coefficient

Lleidanetworks Serveis  Grifols SA

Weak diversification

The 3 months correlation between Lleidanetworks and Grifols is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lleidanetworks Serveis Telemat and Grifols SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grifols SA and Lleidanetworks Serveis 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 Lleidanetworks Serveis Telematics are associated (or correlated) with Grifols SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grifols SA has no effect on the direction of Lleidanetworks Serveis i.e., Lleidanetworks Serveis and Grifols SA go up and down completely randomly.

Pair Corralation between Lleidanetworks Serveis and Grifols SA

Assuming the 90 days trading horizon Lleidanetworks Serveis Telematics is expected to under-perform the Grifols SA. In addition to that, Lleidanetworks Serveis is 1.3 times more volatile than Grifols SA. It trades about 0.0 of its total potential returns per unit of risk. Grifols SA is currently generating about 0.01 per unit of volatility. If you would invest  1,091  in Grifols SA on September 13, 2024 and sell it today you would lose (208.00) from holding Grifols SA or give up 19.07% of portfolio value over 90 days.

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

Lleidanetworks Serveis Telemat  vs.  Grifols SA

Lleidanetworks Serveis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lleidanetworks Serveis Telematics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Lleidanetworks Serveis is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Lleidanetworks Serveis and Grifols SA

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

The idea behind Lleidanetworks Serveis Telematics and Grifols 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.