Correlation Between Guangdong Investment and Grifols SA
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment 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 Guangdong Investment and Grifols SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangdong Investment Limited and Grifols SA, you can compare the effects of market volatilities on Guangdong Investment 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 Guangdong Investment with a short position of Grifols SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Grifols SA.
Diversification Opportunities for Guangdong Investment and Grifols SA
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangdong and Grifols is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Grifols SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grifols SA and Guangdong Investment 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 Guangdong Investment Limited 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 Guangdong Investment i.e., Guangdong Investment and Grifols SA go up and down completely randomly.
Pair Corralation between Guangdong Investment and Grifols SA
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 1.94 times more return on investment than Grifols SA. However, Guangdong Investment is 1.94 times more volatile than Grifols SA. It trades about 0.17 of its potential returns per unit of risk. Grifols SA is currently generating about 0.01 per unit of risk. If you would invest 26.00 in Guangdong Investment Limited on November 3, 2024 and sell it today you would earn a total of 43.00 from holding Guangdong Investment Limited or generate 165.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Grifols SA
Performance |
| Timeline |
| Guangdong Investment |
| Grifols SA |
Guangdong Investment and Grifols SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Grifols SA
The main advantage of trading using opposite Guangdong Investment and Grifols SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment 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.| Guangdong Investment vs. United Utilities Group | Guangdong Investment vs. Companhia de Saneamento | Guangdong Investment vs. TTW Public |
| Grifols SA vs. Arrow Electronics | Grifols SA vs. ARROW ELECTRONICS | Grifols SA vs. Air Transport Services | Grifols SA vs. LPKF Laser Electronics |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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