Correlation Between LSI Software and Santander Bank

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

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

Diversification Opportunities for LSI Software and Santander Bank

-0.45

Correlation Coefficient

LSI Software  Santander Bank

Very good diversification

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

Pair Corralation between LSI Software and Santander Bank

Assuming the 90 days trading horizon LSI Software SA is expected to generate 1.67 times more return on investment than Santander Bank. However, LSI Software is 1.67 times more volatile than Santander Bank Polska. It trades about 0.25 of its potential returns per unit of risk. Santander Bank Polska is currently generating about -0.05 per unit of risk. If you would invest  1,580  in LSI Software SA on April 24, 2025 and sell it today you would earn a total of  1,020  from holding LSI Software SA or generate 64.56% return on investment over 90 days.

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

LSI Software SA  vs.  Santander Bank Polska

LSI Software SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LSI Software SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, LSI Software reported solid returns over the last few months and may actually be approaching a breakup point.

Santander Bank Polska

Risk-Adjusted Performance

Very Weak

Over the last 90 days Santander Bank Polska 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 LSI Software and Santander Bank

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

The idea behind LSI Software SA and Santander Bank Polska 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.