Correlation Between Banco Santander and Lupatech
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Lupatech 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 Lupatech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander Chile and Lupatech SA, you can compare the effects of market volatilities on Banco Santander and Lupatech 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 Lupatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Lupatech.
Diversification Opportunities for Banco Santander and Lupatech
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Banco and Lupatech is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and Lupatech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupatech 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 Chile are associated (or correlated) with Lupatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupatech SA has no effect on the direction of Banco Santander i.e., Banco Santander and Lupatech go up and down completely randomly.
Pair Corralation between Banco Santander and Lupatech
Assuming the 90 days trading horizon Banco Santander Chile is expected to under-perform the Lupatech. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Chile is 1.99 times less risky than Lupatech. The stock trades about -0.12 of its potential returns per unit of risk. The Lupatech SA is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 146.00 in Lupatech SA on August 30, 2024 and sell it today you would lose (6.00) from holding Lupatech SA or give up 4.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Chile vs. Lupatech SA
Performance |
| Timeline |
| Banco Santander Chile |
| Lupatech SA |
Banco Santander and Lupatech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Lupatech
The main advantage of trading using opposite Banco Santander and Lupatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Lupatech 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 Lupatech will offset losses from the drop in Lupatech's long position.| Banco Santander vs. Paycom Software | Banco Santander vs. Beyond Meat | Banco Santander vs. Take Two Interactive Software | Banco Santander vs. Hospital Mater Dei |
| Lupatech vs. PDG Realty SA | Lupatech vs. Positivo Tecnologia SA | Lupatech vs. Rossi Residencial SA | Lupatech vs. Eternit SA |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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