Correlation Between SPORT LISBOA and Grifols SA

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

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

Diversification Opportunities for SPORT LISBOA and Grifols SA

0.1

Correlation Coefficient

SPORT LISBOA  Grifols SA

Average diversification

The 3 months correlation between SPORT and Grifols is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and Grifols SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grifols SA and SPORT LISBOA 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 SPORT LISBOA E 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 SPORT LISBOA i.e., SPORT LISBOA and Grifols SA go up and down completely randomly.

Pair Corralation between SPORT LISBOA and Grifols SA

Assuming the 90 days horizon SPORT LISBOA is expected to generate 2.96 times less return on investment than Grifols SA. In addition to that, SPORT LISBOA is 1.26 times more volatile than Grifols SA. It trades about 0.04 of its total potential returns per unit of risk. Grifols SA is currently generating about 0.15 per unit of volatility. If you would invest  875.00  in Grifols SA on December 5, 2024 and sell it today you would earn a total of  205.00  from holding Grifols SA or generate 23.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

SPORT LISBOA E  vs.  Grifols SA

SPORT LISBOA E

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPORT LISBOA E are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SPORT LISBOA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Grifols SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grifols SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Grifols SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPORT LISBOA and Grifols SA

The main advantage of trading using opposite SPORT LISBOA and Grifols SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPORT LISBOA 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 SPORT LISBOA E 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.