Correlation Between Bankinter and Profithol

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

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

Diversification Opportunities for Bankinter and Profithol

-0.02

Correlation Coefficient

Bankinter  Profithol

Good diversification

The 3 months correlation between Bankinter and Profithol is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bankinter and Profithol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profithol SA and Bankinter 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 Bankinter are associated (or correlated) with Profithol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profithol SA has no effect on the direction of Bankinter i.e., Bankinter and Profithol go up and down completely randomly.

Pair Corralation between Bankinter and Profithol

Assuming the 90 days trading horizon Bankinter is expected to under-perform the Profithol. But the stock apears to be less risky and, when comparing its historical volatility, Bankinter is 10.48 times less risky than Profithol. The stock trades about -0.01 of its potential returns per unit of risk. The Profithol SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  39.00  in Profithol SA on September 12, 2024 and sell it today you would earn a total of  15.00  from holding Profithol SA or generate 38.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Bankinter  vs.  Profithol SA

Bankinter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bankinter has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bankinter is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Profithol SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Profithol SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Profithol exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bankinter and Profithol

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

The idea behind Bankinter and Profithol 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.