Correlation Between Santander Bank and Medicofarma Biotech
Can any of the company-specific risk be diversified away by investing in both Santander Bank and Medicofarma Biotech 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 Medicofarma Biotech 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 Medicofarma Biotech SA, you can compare the effects of market volatilities on Santander Bank and Medicofarma Biotech 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 Medicofarma Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santander Bank and Medicofarma Biotech.
Diversification Opportunities for Santander Bank and Medicofarma Biotech
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Santander and Medicofarma is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Santander Bank Polska and Medicofarma Biotech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicofarma Biotech 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 Medicofarma Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicofarma Biotech has no effect on the direction of Santander Bank i.e., Santander Bank and Medicofarma Biotech go up and down completely randomly.
Pair Corralation between Santander Bank and Medicofarma Biotech
Assuming the 90 days trading horizon Santander Bank Polska is expected to generate 0.34 times more return on investment than Medicofarma Biotech. However, Santander Bank Polska is 2.96 times less risky than Medicofarma Biotech. It trades about -0.05 of its potential returns per unit of risk. Medicofarma Biotech SA is currently generating about -0.08 per unit of risk. If you would invest 50,440 in Santander Bank Polska on August 29, 2024 and sell it today you would lose (6,660) from holding Santander Bank Polska or give up 13.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Santander Bank Polska vs. Medicofarma Biotech SA
Performance |
| Timeline |
| Santander Bank Polska |
| Medicofarma Biotech |
Santander Bank and Medicofarma Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santander Bank and Medicofarma Biotech
The main advantage of trading using opposite Santander Bank and Medicofarma Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santander Bank position performs unexpectedly, Medicofarma Biotech 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 Medicofarma Biotech will offset losses from the drop in Medicofarma Biotech's long position.| Santander Bank vs. mBank SA | Santander Bank vs. UF Games SA | Santander Bank vs. Echo Investment SA | Santander Bank vs. Gaming Factory SA |
| Medicofarma Biotech vs. Clean Carbon Energy | Medicofarma Biotech vs. ADX | Medicofarma Biotech vs. Agroliga Group PLC | Medicofarma Biotech vs. Vee 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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