Correlation Between Santander Bank and Asseco Business
Can any of the company-specific risk be diversified away by investing in both Santander Bank and Asseco Business 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 Santander Bank and Asseco Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santander Bank Polska and Asseco Business Solutions, you can compare the effects of market volatilities on Santander Bank and Asseco Business 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 Santander Bank with a short position of Asseco Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santander Bank and Asseco Business.
Diversification Opportunities for Santander Bank and Asseco Business
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Santander and Asseco is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Santander Bank Polska and Asseco Business Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asseco Business Solutions and Santander Bank 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 Santander Bank Polska are associated (or correlated) with Asseco Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asseco Business Solutions has no effect on the direction of Santander Bank i.e., Santander Bank and Asseco Business go up and down completely randomly.
Pair Corralation between Santander Bank and Asseco Business
Assuming the 90 days trading horizon Santander Bank is expected to generate 1.02 times less return on investment than Asseco Business. In addition to that, Santander Bank is 1.11 times more volatile than Asseco Business Solutions. It trades about 0.04 of its total potential returns per unit of risk. Asseco Business Solutions is currently generating about 0.05 per unit of volatility. If you would invest 3,912 in Asseco Business Solutions on August 31, 2024 and sell it today you would earn a total of 1,188 from holding Asseco Business Solutions or generate 30.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Santander Bank Polska vs. Asseco Business Solutions
Performance |
| Timeline |
| Santander Bank Polska |
| Asseco Business Solutions |
Santander Bank and Asseco Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santander Bank and Asseco Business
The main advantage of trading using opposite Santander Bank and Asseco Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santander Bank position performs unexpectedly, Asseco Business 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 Asseco Business will offset losses from the drop in Asseco Business' long position.The idea behind Santander Bank Polska and Asseco Business Solutions 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.| Asseco Business vs. Asseco Poland SA | Asseco Business vs. LSI Software SA | Asseco Business vs. Quantum Software SA | Asseco Business vs. Detalion 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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