Correlation Between Banco Santander and OrangePL

Can any of the company-specific risk be diversified away by investing in both Banco Santander and OrangePL 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 OrangePL 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 OrangePL, you can compare the effects of market volatilities on Banco Santander and OrangePL 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 OrangePL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and OrangePL.

Diversification Opportunities for Banco Santander and OrangePL

-0.58

Correlation Coefficient

Banco Santander  OrangePL

Excellent diversification

The 3 months correlation between Banco and OrangePL is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and OrangePL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OrangePL 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 OrangePL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OrangePL has no effect on the direction of Banco Santander i.e., Banco Santander and OrangePL go up and down completely randomly.

Pair Corralation between Banco Santander and OrangePL

Assuming the 90 days trading horizon Banco Santander SA is expected to under-perform the OrangePL. In addition to that, Banco Santander is 1.27 times more volatile than OrangePL. It trades about -0.02 of its total potential returns per unit of risk. OrangePL is currently generating about 0.0 per unit of volatility. If you would invest  773.00  in OrangePL on August 29, 2024 and sell it today you would lose (5.00) from holding OrangePL or give up 0.65% 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.  OrangePL

Banco Santander SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Santander SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Banco Santander is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

OrangePL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OrangePL has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Banco Santander and OrangePL

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

The idea behind Banco Santander SA and OrangePL 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.