Correlation Between Centrum Finansowe and Banco Santander

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

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

Diversification Opportunities for Centrum Finansowe and Banco Santander

-0.78

Correlation Coefficient

Centrum Finansowe  Banco Santander

Pay attention - limited upside

The 3 months correlation between Centrum and Banco is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Centrum Finansowe Banku and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA and Centrum Finansowe 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 Centrum Finansowe Banku are associated (or correlated) with Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander SA has no effect on the direction of Centrum Finansowe i.e., Centrum Finansowe and Banco Santander go up and down completely randomly.

Pair Corralation between Centrum Finansowe and Banco Santander

Assuming the 90 days trading horizon Centrum Finansowe Banku is expected to under-perform the Banco Santander. In addition to that, Centrum Finansowe is 1.05 times more volatile than Banco Santander SA. It trades about -0.07 of its total potential returns per unit of risk. Banco Santander SA is currently generating about 0.33 per unit of volatility. If you would invest  1,833  in Banco Santander SA on December 22, 2024 and sell it today you would earn a total of  902.00  from holding Banco Santander SA or generate 49.21% return on investment over 90 days.

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

Centrum Finansowe Banku  vs.  Banco Santander SA

Centrum Finansowe Banku

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centrum Finansowe Banku has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Banco Santander SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander SA are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Banco Santander reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centrum Finansowe and Banco Santander

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

The idea behind Centrum Finansowe Banku and Banco Santander 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.