Correlation Between Banco Santander and Betacom SA
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Betacom SA 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 Betacom SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander SA and Betacom SA, you can compare the effects of market volatilities on Banco Santander and Betacom SA 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 Betacom SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Betacom SA.
Diversification Opportunities for Banco Santander and Betacom SA
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and Betacom is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and Betacom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betacom 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 SA are associated (or correlated) with Betacom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betacom SA has no effect on the direction of Banco Santander i.e., Banco Santander and Betacom SA go up and down completely randomly.
Pair Corralation between Banco Santander and Betacom SA
Assuming the 90 days trading horizon Banco Santander SA is expected to under-perform the Betacom SA. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander SA is 1.26 times less risky than Betacom SA. The stock trades about -0.09 of its potential returns per unit of risk. The Betacom SA is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 434.00 in Betacom SA on August 28, 2024 and sell it today you would lose (10.00) from holding Betacom SA or give up 2.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander SA vs. Betacom SA
Performance |
| Timeline |
| Banco Santander SA |
| Betacom SA |
Banco Santander and Betacom SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Betacom SA
The main advantage of trading using opposite Banco Santander and Betacom SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Betacom SA 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 Betacom SA will offset losses from the drop in Betacom SA's long position.| Banco Santander vs. Igoria Trade SA | Banco Santander vs. Marie Brizard Wine | Banco Santander vs. Live Motion Games | Banco Santander vs. Pixel Crow Games |
| Betacom SA vs. Asseco Business Solutions | Betacom SA vs. Detalion Games SA | Betacom SA vs. Asseco South Eastern | Betacom SA vs. Movie Games SA |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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