Correlation Between CD PROJEKT and Banco Santander

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

By analyzing existing cross correlation between CD PROJEKT SA and Banco Santander SA, you can compare the effects of market volatilities on CD PROJEKT and Banco Santander 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 CD PROJEKT with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of CD PROJEKT and Banco Santander.

Diversification Opportunities for CD PROJEKT and Banco Santander

-0.46

Correlation Coefficient

CD PROJEKT  Banco Santander

Very good diversification

The 3 months correlation between CDR and Banco is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding CD PROJEKT SA and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA and CD PROJEKT 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 CD PROJEKT SA are associated (or correlated) with Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander SA has no effect on the direction of CD PROJEKT i.e., CD PROJEKT and Banco Santander go up and down completely randomly.

Pair Corralation between CD PROJEKT and Banco Santander

Assuming the 90 days trading horizon CD PROJEKT SA is expected to under-perform the Banco Santander. In addition to that, CD PROJEKT is 1.06 times more volatile than Banco Santander SA. It trades about -0.04 of its total potential returns per unit of risk. Banco Santander SA is currently generating about -0.02 per unit of volatility. If you would invest  1,935  in Banco Santander SA on September 3, 2024 and sell it today you would lose (57.00) from holding Banco Santander SA or give up 2.95% of portfolio value over 90 days.

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

CD PROJEKT SA  vs.  Banco Santander SA

CD PROJEKT SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with CD PROJEKT and Banco Santander

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

The idea behind CD PROJEKT SA and Banco Santander SA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.