Correlation Between Road Studio and Santander Bank

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

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

Diversification Opportunities for Road Studio and Santander Bank

0.61

Correlation Coefficient

Road Studio  Santander Bank

Poor diversification

The 3 months correlation between Road and Santander is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Road Studio SA 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 Road Studio 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 Road Studio SA 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 Road Studio i.e., Road Studio and Santander Bank go up and down completely randomly.

Pair Corralation between Road Studio and Santander Bank

Assuming the 90 days trading horizon Road Studio SA is expected to generate 2.6 times more return on investment than Santander Bank. However, Road Studio is 2.6 times more volatile than Santander Bank Polska. It trades about 0.13 of its potential returns per unit of risk. Santander Bank Polska is currently generating about 0.21 per unit of risk. If you would invest  456.00  in Road Studio SA on November 29, 2024 and sell it today you would earn a total of  142.00  from holding Road Studio SA or generate 31.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.83%
Values	Daily Returns

Road Studio SA  vs.  Santander Bank Polska

Road Studio SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Road Studio SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Road Studio reported solid returns over the last few months and may actually be approaching a breakup point.

Santander Bank Polska

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Santander Bank Polska are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Santander Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Road Studio and Santander Bank

The main advantage of trading using opposite Road Studio and Santander Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Road Studio 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 Road Studio SA 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.