Correlation Between ALERION CLEANPOWER and Santander Bank

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

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

Diversification Opportunities for ALERION CLEANPOWER and Santander Bank

-0.31

Correlation Coefficient

ALERION CLEANPOWER  Santander Bank

Very good diversification

The 3 months correlation between ALERION and Santander is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 ALERION CLEANPOWER i.e., ALERION CLEANPOWER and Santander Bank go up and down completely randomly.

Pair Corralation between ALERION CLEANPOWER and Santander Bank

Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to under-perform the Santander Bank. In addition to that, ALERION CLEANPOWER is 1.41 times more volatile than Santander Bank Polska. It trades about -0.02 of its total potential returns per unit of risk. Santander Bank Polska is currently generating about 0.18 per unit of volatility. If you would invest  10,685  in Santander Bank Polska on December 24, 2024 and sell it today you would earn a total of  2,960  from holding Santander Bank Polska or generate 27.7% return on investment over 90 days.

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

ALERION CLEANPOWER  vs.  Santander Bank Polska

ALERION CLEANPOWER

Risk-Adjusted Performance

Very Weak

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

Santander Bank Polska

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Santander Bank Polska are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Santander Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALERION CLEANPOWER and Santander Bank

The main advantage of trading using opposite ALERION CLEANPOWER and Santander Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.