Correlation Between Banco Santander and Cemepe Investimentos
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Cemepe Investimentos 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 Banco Santander and Cemepe Investimentos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander Chile and Cemepe Investimentos SA, you can compare the effects of market volatilities on Banco Santander and Cemepe Investimentos 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 Banco Santander with a short position of Cemepe Investimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Cemepe Investimentos.
Diversification Opportunities for Banco Santander and Cemepe Investimentos
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Banco and Cemepe is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and Cemepe Investimentos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemepe Investimentos and Banco Santander 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 Banco Santander Chile are associated (or correlated) with Cemepe Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemepe Investimentos has no effect on the direction of Banco Santander i.e., Banco Santander and Cemepe Investimentos go up and down completely randomly.
Pair Corralation between Banco Santander and Cemepe Investimentos
Assuming the 90 days trading horizon Banco Santander is expected to generate 33.47 times less return on investment than Cemepe Investimentos. But when comparing it to its historical volatility, Banco Santander Chile is 1.31 times less risky than Cemepe Investimentos. It trades about 0.0 of its potential returns per unit of risk. Cemepe Investimentos SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 450.00 in Cemepe Investimentos SA on September 26, 2024 and sell it today you would earn a total of 50.00 from holding Cemepe Investimentos SA or generate 11.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Banco Santander Chile vs. Cemepe Investimentos SA
Performance |
Timeline |
Banco Santander Chile |
Cemepe Investimentos |
Banco Santander and Cemepe Investimentos Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Banco Santander and Cemepe Investimentos
The main advantage of trading using opposite Banco Santander and Cemepe Investimentos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Cemepe Investimentos 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 Cemepe Investimentos will offset losses from the drop in Cemepe Investimentos' long position.Banco Santander vs. Lloyds Banking Group | Banco Santander vs. KeyCorp | Banco Santander vs. Karsten SA | Banco Santander vs. Recrusul SA |
Cemepe Investimentos vs. Toyota Motor | Cemepe Investimentos vs. Taiwan Semiconductor Manufacturing | Cemepe Investimentos vs. Sony Group | Cemepe Investimentos vs. Banco Santander Chile |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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