Correlation Between KGHM Polska and Banco Santander
Can any of the company-specific risk be diversified away by investing in both KGHM Polska 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 KGHM Polska and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KGHM Polska Miedz and Banco Santander SA, you can compare the effects of market volatilities on KGHM Polska 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 KGHM Polska with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and Banco Santander.
Diversification Opportunities for KGHM Polska and Banco Santander
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KGHM and Banco is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz 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 KGHM Polska 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 KGHM Polska Miedz 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 KGHM Polska i.e., KGHM Polska and Banco Santander go up and down completely randomly.
Pair Corralation between KGHM Polska and Banco Santander
Assuming the 90 days trading horizon KGHM Polska is expected to generate 9.34 times less return on investment than Banco Santander. In addition to that, KGHM Polska is 1.23 times more volatile than Banco Santander SA. It trades about 0.0 of its total potential returns per unit of risk. Banco Santander SA is currently generating about 0.05 per unit of volatility. If you would invest 1,443 in Banco Santander SA on October 23, 2024 and sell it today you would earn a total of 631.00 from holding Banco Santander SA or generate 43.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
KGHM Polska Miedz vs. Banco Santander SA
Performance |
| Timeline |
| KGHM Polska Miedz |
| Banco Santander SA |
KGHM Polska and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and Banco Santander
The main advantage of trading using opposite KGHM Polska and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska 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.| KGHM Polska vs. LSI Software SA | KGHM Polska vs. SOFTWARE MANSION SPOLKA | KGHM Polska vs. Noble Financials SA | KGHM Polska vs. Cloud Technologies SA |
| Banco Santander vs. Marie Brizard Wine | Banco Santander vs. Ultimate Games SA | Banco Santander vs. Inter Cars SA | Banco Santander vs. SOFTWARE MANSION SPOLKA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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