Correlation Between Powszechna Kasa and Banco Santander

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

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

Diversification Opportunities for Powszechna Kasa and Banco Santander

0.29

Correlation Coefficient

Powszechna Kasa  Banco Santander

Modest diversification

The 3 months correlation between Powszechna and Banco is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Powszechna Kasa Oszczednosci 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 Powszechna Kasa 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 Powszechna Kasa Oszczednosci 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 Powszechna Kasa i.e., Powszechna Kasa and Banco Santander go up and down completely randomly.

Pair Corralation between Powszechna Kasa and Banco Santander

Assuming the 90 days trading horizon Powszechna Kasa Oszczednosci is expected to generate 1.02 times more return on investment than Banco Santander. However, Powszechna Kasa is 1.02 times more volatile than Banco Santander SA. It trades about 0.08 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.05 per unit of risk. If you would invest  3,189  in Powszechna Kasa Oszczednosci on September 30, 2024 and sell it today you would earn a total of  2,791  from holding Powszechna Kasa Oszczednosci or generate 87.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Powszechna Kasa Oszczednosci  vs.  Banco Santander SA

Powszechna Kasa Oszc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Powszechna Kasa Oszczednosci are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Powszechna Kasa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Banco Santander SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Santander SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Banco Santander is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Powszechna Kasa and Banco Santander

The main advantage of trading using opposite Powszechna Kasa and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powszechna Kasa 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 Powszechna Kasa Oszczednosci 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.