Correlation Between SIERRA METALS and Banco Santander

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Can any of the company-specific risk be diversified away by investing in both SIERRA METALS 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 SIERRA METALS and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIERRA METALS and Banco Santander SA, you can compare the effects of market volatilities on SIERRA METALS 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 SIERRA METALS with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIERRA METALS and Banco Santander.

Diversification Opportunities for SIERRA METALS and Banco Santander

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between SIERRA and Banco is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SIERRA METALS 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 SIERRA METALS 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 SIERRA METALS 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 SIERRA METALS i.e., SIERRA METALS and Banco Santander go up and down completely randomly.

Pair Corralation between SIERRA METALS and Banco Santander

Assuming the 90 days trading horizon SIERRA METALS is expected to generate 3.04 times more return on investment than Banco Santander. However, SIERRA METALS is 3.04 times more volatile than Banco Santander SA. It trades about 0.08 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.07 per unit of risk. If you would invest  12.00  in SIERRA METALS on October 9, 2024 and sell it today you would earn a total of  42.00  from holding SIERRA METALS or generate 350.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SIERRA METALS  vs.  Banco Santander SA

 Performance 
       Timeline  
SIERRA METALS 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in SIERRA METALS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SIERRA METALS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Banco Santander SA 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Banco Santander is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

SIERRA METALS and Banco Santander Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SIERRA METALS and Banco Santander

The main advantage of trading using opposite SIERRA METALS and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIERRA METALS 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.
The idea behind SIERRA METALS and Banco Santander SA 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.
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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