Correlation Between Repsol and Gestamp Automocion

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

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

Diversification Opportunities for Repsol and Gestamp Automocion

0.93

Correlation Coefficient

Repsol  Gestamp Automocion

Almost no diversification

The 3 months correlation between Repsol and Gestamp is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Repsol and Gestamp Automocion SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gestamp Automocion and Repsol 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 Repsol are associated (or correlated) with Gestamp Automocion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gestamp Automocion has no effect on the direction of Repsol i.e., Repsol and Gestamp Automocion go up and down completely randomly.

Pair Corralation between Repsol and Gestamp Automocion

Assuming the 90 days trading horizon Repsol is expected to generate 0.61 times more return on investment than Gestamp Automocion. However, Repsol is 1.64 times less risky than Gestamp Automocion. It trades about 0.39 of its potential returns per unit of risk. Gestamp Automocion SA is currently generating about 0.19 per unit of risk. If you would invest  992.00  in Repsol on April 22, 2025 and sell it today you would earn a total of  314.00  from holding Repsol or generate 31.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Repsol  vs.  Gestamp Automocion SA

Repsol

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Repsol are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Repsol exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gestamp Automocion

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gestamp Automocion SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Gestamp Automocion exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Repsol and Gestamp Automocion

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

The idea behind Repsol and Gestamp Automocion 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.