Correlation Between Grifols SA and Casio Computer

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

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

Diversification Opportunities for Grifols SA and Casio Computer

-0.66

Correlation Coefficient

Grifols SA  Casio Computer

Excellent diversification

The 3 months correlation between Grifols and Casio is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Grifols SA and Casio Computer CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer CoLtd 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 Casio Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casio Computer CoLtd has no effect on the direction of Grifols SA i.e., Grifols SA and Casio Computer go up and down completely randomly.

Pair Corralation between Grifols SA and Casio Computer

Assuming the 90 days trading horizon Grifols SA is expected to under-perform the Casio Computer. In addition to that, Grifols SA is 1.92 times more volatile than Casio Computer CoLtd. It trades about -0.06 of its total potential returns per unit of risk. Casio Computer CoLtd is currently generating about 0.17 per unit of volatility. If you would invest  675.00  in Casio Computer CoLtd on October 25, 2024 and sell it today you would earn a total of  109.00  from holding Casio Computer CoLtd or generate 16.15% return on investment over 90 days.

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

Grifols SA  vs.  Casio Computer CoLtd

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. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Casio Computer CoLtd

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Casio Computer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grifols SA and Casio Computer

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

The idea behind Grifols SA and Casio Computer CoLtd 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.