Correlation Between Banco Santander and PCF Group

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

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

Diversification Opportunities for Banco Santander and PCF Group

0.11

Correlation Coefficient

Banco Santander  PCF Group

Average diversification

The 3 months correlation between Banco and PCF is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and PCF Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCF Group SA and Banco 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 Banco Santander SA are associated (or correlated) with PCF Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCF Group SA has no effect on the direction of Banco Santander i.e., Banco Santander and PCF Group go up and down completely randomly.

Pair Corralation between Banco Santander and PCF Group

Assuming the 90 days trading horizon Banco Santander SA is expected to generate 0.53 times more return on investment than PCF Group. However, Banco Santander SA is 1.89 times less risky than PCF Group. It trades about 0.03 of its potential returns per unit of risk. PCF Group SA is currently generating about -0.14 per unit of risk. If you would invest  1,852  in Banco Santander SA on October 12, 2024 and sell it today you would earn a total of  108.00  from holding Banco Santander SA or generate 5.83% return on investment over 90 days.

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

Banco Santander SA  vs.  PCF Group SA

Banco Santander SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

PCF Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PCF Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Banco Santander and PCF Group

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

The idea behind Banco Santander SA and PCF Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.