Correlation Between Banco Santander and Powszechna Kasa

Can any of the company-specific risk be diversified away by investing in both Banco Santander and Powszechna Kasa 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 Powszechna Kasa 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 Powszechna Kasa Oszczednosci, you can compare the effects of market volatilities on Banco Santander and Powszechna Kasa 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 Powszechna Kasa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Powszechna Kasa.

Diversification Opportunities for Banco Santander and Powszechna Kasa

0.29

Correlation Coefficient

Banco Santander  Powszechna Kasa

Modest diversification

The 3 months correlation between Banco and Powszechna is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and Powszechna Kasa Oszczednosci in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powszechna Kasa Oszc 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 Powszechna Kasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powszechna Kasa Oszc has no effect on the direction of Banco Santander i.e., Banco Santander and Powszechna Kasa go up and down completely randomly.

Pair Corralation between Banco Santander and Powszechna Kasa

Assuming the 90 days trading horizon Banco Santander SA is expected to under-perform the Powszechna Kasa. In addition to that, Banco Santander is 1.31 times more volatile than Powszechna Kasa Oszczednosci. It trades about -0.02 of its total potential returns per unit of risk. Powszechna Kasa Oszczednosci is currently generating about 0.17 per unit of volatility. If you would invest  5,784  in Powszechna Kasa Oszczednosci on October 2, 2024 and sell it today you would earn a total of  196.00  from holding Powszechna Kasa Oszczednosci or generate 3.39% return on investment over 90 days.

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

Banco Santander SA  vs.  Powszechna Kasa Oszczednosci

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.

Powszechna Kasa Oszc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Powszechna Kasa Oszczednosci are ranked lower than 7 (%) 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.

Pair Trading with Banco Santander and Powszechna Kasa

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

The idea behind Banco Santander SA and Powszechna Kasa Oszczednosci 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.