Correlation Between Santander Bank and Comba Telecom

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

By analyzing existing cross correlation between Santander Bank Polska and Comba Telecom Systems, you can compare the effects of market volatilities on Santander Bank and Comba Telecom 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 Santander Bank with a short position of Comba Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santander Bank and Comba Telecom.

Diversification Opportunities for Santander Bank and Comba Telecom

0.28

Correlation Coefficient

Santander Bank  Comba Telecom

Modest diversification

The 3 months correlation between Santander and Comba is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Santander Bank Polska and Comba Telecom Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comba Telecom Systems and Santander Bank 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 Santander Bank Polska are associated (or correlated) with Comba Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comba Telecom Systems has no effect on the direction of Santander Bank i.e., Santander Bank and Comba Telecom go up and down completely randomly.

Pair Corralation between Santander Bank and Comba Telecom

Assuming the 90 days horizon Santander Bank Polska is expected to under-perform the Comba Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Santander Bank Polska is 2.2 times less risky than Comba Telecom. The stock trades about -0.04 of its potential returns per unit of risk. The Comba Telecom Systems is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  6.15  in Comba Telecom Systems on September 30, 2024 and sell it today you would earn a total of  7.85  from holding Comba Telecom Systems or generate 127.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Santander Bank Polska  vs.  Comba Telecom Systems

Santander Bank Polska

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Santander Bank Polska has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Santander Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Comba Telecom Systems

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Comba Telecom Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Comba Telecom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Santander Bank and Comba Telecom

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

The idea behind Santander Bank Polska and Comba Telecom Systems 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.