Correlation Between Banco Santander and Central Puerto
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Central Puerto 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 Central Puerto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander Brasil and Central Puerto SA, you can compare the effects of market volatilities on Banco Santander and Central Puerto 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 Central Puerto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Central Puerto.
Diversification Opportunities for Banco Santander and Central Puerto
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Banco and Central is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and Central Puerto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Puerto 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 Brasil are associated (or correlated) with Central Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Puerto SA has no effect on the direction of Banco Santander i.e., Banco Santander and Central Puerto go up and down completely randomly.
Pair Corralation between Banco Santander and Central Puerto
Assuming the 90 days trading horizon Banco Santander Brasil is expected to under-perform the Central Puerto. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Brasil is 1.24 times less risky than Central Puerto. The stock trades about -0.12 of its potential returns per unit of risk. The Central Puerto SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 116,500 in Central Puerto SA on November 2, 2024 and sell it today you would earn a total of 55,500 from holding Central Puerto SA or generate 47.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.04% |
| Values | Daily Returns |
Banco Santander Brasil vs. Central Puerto SA
Performance |
| Timeline |
| Banco Santander Brasil |
| Central Puerto SA |
Banco Santander and Central Puerto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Central Puerto
The main advantage of trading using opposite Banco Santander and Central Puerto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Central Puerto 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 Central Puerto will offset losses from the drop in Central Puerto's long position.| Banco Santander vs. Harmony Gold Mining | Banco Santander vs. United States Steel | Banco Santander vs. Compania de Transporte | Banco Santander vs. Agrometal SAI |
| Central Puerto vs. United States Steel | Central Puerto vs. Harmony Gold Mining | Central Puerto vs. Telecom Argentina | Central Puerto vs. Agrometal SAI |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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