Correlation Between CHINA CONBANK and Banco Santander
Can any of the company-specific risk be diversified away by investing in both CHINA CONBANK and Banco Santander 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 CHINA CONBANK and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA BANK ADR20 and Banco Santander SA, you can compare the effects of market volatilities on CHINA CONBANK and Banco Santander 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 CHINA CONBANK with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA CONBANK and Banco Santander.
Diversification Opportunities for CHINA CONBANK and Banco Santander
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHINA and Banco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding CHINA BANK ADR20 and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA and CHINA CONBANK 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 CHINA BANK ADR20 are associated (or correlated) with Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander SA has no effect on the direction of CHINA CONBANK i.e., CHINA CONBANK and Banco Santander go up and down completely randomly.
Pair Corralation between CHINA CONBANK and Banco Santander
Assuming the 90 days trading horizon CHINA CONBANK is expected to generate 1.01 times less return on investment than Banco Santander. In addition to that, CHINA CONBANK is 1.21 times more volatile than Banco Santander SA. It trades about 0.06 of its total potential returns per unit of risk. Banco Santander SA is currently generating about 0.07 per unit of volatility. If you would invest 294.00 in Banco Santander SA on August 31, 2024 and sell it today you would earn a total of 140.00 from holding Banco Santander SA or generate 47.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
CHINA BANK ADR20 vs. Banco Santander SA
Performance |
| Timeline |
| CHINA BANK ADR20 |
| Banco Santander SA |
CHINA CONBANK and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA CONBANK and Banco Santander
The main advantage of trading using opposite CHINA CONBANK and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA CONBANK position performs unexpectedly, Banco Santander 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 Banco Santander will offset losses from the drop in Banco Santander's long position.| CHINA CONBANK vs. INDCOMMBK CHINA ADR20 | CHINA CONBANK vs. AGRICULTBK HADR25 YC | CHINA CONBANK vs. COMMONWBK AUSTRSPADRS | CHINA CONBANK vs. The Toronto Dominion Bank |
| Banco Santander vs. INDCOMMBK CHINA ADR20 | Banco Santander vs. CHINA BANK ADR20 | Banco Santander vs. AGRICULTBK HADR25 YC | Banco Santander vs. COMMONWBK AUSTRSPADRS |
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 CEOs Directory module to screen CEOs from public companies around the world.
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