Correlation Between CeoTronics and Santander Bank

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

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

Diversification Opportunities for CeoTronics and Santander Bank

0.02

Correlation Coefficient

CeoTronics  Santander Bank

Significant diversification

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

Pair Corralation between CeoTronics and Santander Bank

Assuming the 90 days trading horizon CeoTronics AG is expected to generate 1.18 times more return on investment than Santander Bank. However, CeoTronics is 1.18 times more volatile than Santander Bank Polska. It trades about 0.07 of its potential returns per unit of risk. Santander Bank Polska is currently generating about 0.0 per unit of risk. If you would invest  530.00  in CeoTronics AG on September 26, 2024 and sell it today you would earn a total of  60.00  from holding CeoTronics AG or generate 11.32% return on investment over 90 days.

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

CeoTronics AG  vs.  Santander Bank Polska

CeoTronics AG

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CeoTronics AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, CeoTronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CeoTronics and Santander Bank

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

The idea behind CeoTronics AG and Santander Bank Polska 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.