Correlation Between Banco Santander and Loma Negra

Can any of the company-specific risk be diversified away by investing in both Banco Santander and Loma Negra 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 Loma Negra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banco Santander Chile and Loma Negra Compania, you can compare the effects of market volatilities on Banco Santander and Loma Negra 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 Loma Negra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Loma Negra.

Diversification Opportunities for Banco Santander and Loma Negra

0.45

Correlation Coefficient

Banco Santander  Loma Negra

Very weak diversification

The 3 months correlation between Banco and Loma is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and Loma Negra Compania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loma Negra Compania 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 Chile are associated (or correlated) with Loma Negra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loma Negra Compania has no effect on the direction of Banco Santander i.e., Banco Santander and Loma Negra go up and down completely randomly.

Pair Corralation between Banco Santander and Loma Negra

Given the investment horizon of 90 days Banco Santander Chile is expected to under-perform the Loma Negra. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Chile is 2.23 times less risky than Loma Negra. The stock trades about -0.03 of its potential returns per unit of risk. The Loma Negra Compania is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,147  in Loma Negra Compania on May 6, 2025 and sell it today you would earn a total of  35.00  from holding Loma Negra Compania or generate 3.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Banco Santander Chile  vs.  Loma Negra Compania

Banco Santander Chile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banco Santander Chile has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Loma Negra Compania

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Loma Negra Compania are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Loma Negra is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Banco Santander and Loma Negra

The main advantage of trading using opposite Banco Santander and Loma Negra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Loma Negra 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 Loma Negra will offset losses from the drop in Loma Negra's long position.

The idea behind Banco Santander Chile and Loma Negra Compania 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.