Correlation Between GI Group and Banco Santander

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

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

Diversification Opportunities for GI Group and Banco Santander

-0.47

Correlation Coefficient

GI Group  Banco Santander

Very good diversification

The 3 months correlation between GIG and Banco is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding GI Group Poland 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 GI Group 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 GI Group Poland 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 GI Group i.e., GI Group and Banco Santander go up and down completely randomly.

Pair Corralation between GI Group and Banco Santander

Assuming the 90 days trading horizon GI Group Poland is expected to under-perform the Banco Santander. In addition to that, GI Group is 1.02 times more volatile than Banco Santander SA. It trades about -0.14 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

GI Group Poland  vs.  Banco Santander SA

GI Group Poland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GI Group Poland has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise 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 GI Group and Banco Santander

The main advantage of trading using opposite GI Group and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GI Group 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 GI Group Poland 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.