Correlation Between Quaker Chemical and Grifols SA

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

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

Diversification Opportunities for Quaker Chemical and Grifols SA

-0.09

Correlation Coefficient

Quaker Chemical  Grifols SA

Good diversification

The 3 months correlation between Quaker and Grifols is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and Grifols SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grifols SA and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical i.e., Quaker Chemical and Grifols SA go up and down completely randomly.

Pair Corralation between Quaker Chemical and Grifols SA

Assuming the 90 days horizon Quaker Chemical is expected to under-perform the Grifols SA. But the stock apears to be less risky and, when comparing its historical volatility, Quaker Chemical is 1.32 times less risky than Grifols SA. The stock trades about -0.07 of its potential returns per unit of risk. The Grifols SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  919.00  in Grifols SA on December 27, 2024 and sell it today you would lose (26.00) from holding Grifols SA or give up 2.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Quaker Chemical  vs.  Grifols SA

Quaker Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quaker Chemical 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.

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. Despite nearly stable basic indicators, Grifols SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Quaker Chemical and Grifols SA

The main advantage of trading using opposite Quaker Chemical and Grifols SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical 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 Quaker Chemical 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.