Correlation Between SANTANDER and Datagroup

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

By analyzing existing cross correlation between SANTANDER UK 10 and Datagroup SE, you can compare the effects of market volatilities on SANTANDER and Datagroup 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 SANTANDER with a short position of Datagroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and Datagroup.

Diversification Opportunities for SANTANDER and Datagroup

-0.47

Correlation Coefficient

SANTANDER  Datagroup

Very good diversification

The 3 months correlation between SANTANDER and Datagroup is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 10 and Datagroup SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datagroup SE and SANTANDER 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 SANTANDER UK 10 are associated (or correlated) with Datagroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datagroup SE has no effect on the direction of SANTANDER i.e., SANTANDER and Datagroup go up and down completely randomly.

Pair Corralation between SANTANDER and Datagroup

Assuming the 90 days trading horizon SANTANDER UK 10 is expected to generate 0.35 times more return on investment than Datagroup. However, SANTANDER UK 10 is 2.89 times less risky than Datagroup. It trades about 0.1 of its potential returns per unit of risk. Datagroup SE is currently generating about 0.0 per unit of risk. If you would invest  12,411  in SANTANDER UK 10 on October 5, 2024 and sell it today you would earn a total of  3,149  from holding SANTANDER UK 10 or generate 25.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.73%
Values	Daily Returns

SANTANDER UK 10  vs.  Datagroup SE

SANTANDER UK 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SANTANDER UK 10 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, SANTANDER is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Datagroup SE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Datagroup SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Datagroup may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SANTANDER and Datagroup

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

The idea behind SANTANDER UK 10 and Datagroup SE 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 Commodity Directory module to find actively traded commodities issued by global exchanges.