Correlation Between Banco Santander and Oversea-Chinese BankingLimited
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Oversea-Chinese BankingLimited 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 Oversea-Chinese BankingLimited 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 Oversea Chinese Banking, you can compare the effects of market volatilities on Banco Santander and Oversea-Chinese BankingLimited 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 Oversea-Chinese BankingLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Oversea-Chinese BankingLimited.
Diversification Opportunities for Banco Santander and Oversea-Chinese BankingLimited
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and Oversea-Chinese is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and Oversea Chinese Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oversea-Chinese BankingLimited 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 Oversea-Chinese BankingLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oversea-Chinese BankingLimited has no effect on the direction of Banco Santander i.e., Banco Santander and Oversea-Chinese BankingLimited go up and down completely randomly.
Pair Corralation between Banco Santander and Oversea-Chinese BankingLimited
Given the investment horizon of 90 days Banco Santander Brasil is expected to under-perform the Oversea-Chinese BankingLimited. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Brasil is 1.39 times less risky than Oversea-Chinese BankingLimited. The stock trades about -0.08 of its potential returns per unit of risk. The Oversea Chinese Banking is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,080 in Oversea Chinese Banking on September 3, 2024 and sell it today you would earn a total of 160.00 from holding Oversea Chinese Banking or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Brasil vs. Oversea Chinese Banking
Performance |
| Timeline |
| Banco Santander Brasil |
| Oversea-Chinese BankingLimited |
Banco Santander and Oversea-Chinese BankingLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Oversea-Chinese BankingLimited
The main advantage of trading using opposite Banco Santander and Oversea-Chinese BankingLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Oversea-Chinese BankingLimited 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 Oversea-Chinese BankingLimited will offset losses from the drop in Oversea-Chinese BankingLimited's long position.| Banco Santander vs. Banco De Chile | Banco Santander vs. CrossFirst Bankshares | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. CF Bankshares |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |