Correlation Between Banco Santander and Delhi Bank

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

By analyzing existing cross correlation between Banco Santander Brasil and Delhi Bank Corp, you can compare the effects of market volatilities on Banco Santander and Delhi Bank 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 Delhi Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Delhi Bank.

Diversification Opportunities for Banco Santander and Delhi Bank

-0.06

Correlation Coefficient

Banco Santander  Delhi Bank

Good diversification

The 3 months correlation between Banco and Delhi is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and Delhi Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delhi Bank Corp 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 Brasil are associated (or correlated) with Delhi Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delhi Bank Corp has no effect on the direction of Banco Santander i.e., Banco Santander and Delhi Bank go up and down completely randomly.

Pair Corralation between Banco Santander and Delhi Bank

Given the investment horizon of 90 days Banco Santander Brasil is expected to under-perform the Delhi Bank. In addition to that, Banco Santander is 28.29 times more volatile than Delhi Bank Corp. It trades about -0.12 of its total potential returns per unit of risk. Delhi Bank Corp is currently generating about 0.26 per unit of volatility. If you would invest  2,050  in Delhi Bank Corp on September 29, 2024 and sell it today you would earn a total of  10.00  from holding Delhi Bank Corp or generate 0.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Banco Santander Brasil  vs.  Delhi Bank Corp

Banco Santander Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Santander Brasil has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Delhi Bank Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Delhi Bank Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Delhi Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Banco Santander and Delhi Bank

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

The idea behind Banco Santander Brasil and Delhi Bank Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.