Correlation Between Bancolombia and OM Holdings
Can any of the company-specific risk be diversified away by investing in both Bancolombia and OM Holdings 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 Bancolombia and OM Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bancolombia SA ADR and OM Holdings Limited, you can compare the effects of market volatilities on Bancolombia and OM Holdings 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 Bancolombia with a short position of OM Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bancolombia and OM Holdings.
Diversification Opportunities for Bancolombia and OM Holdings
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bancolombia and OMHLF is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bancolombia SA ADR and OM Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OM Holdings Limited and Bancolombia 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 Bancolombia SA ADR are associated (or correlated) with OM Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OM Holdings Limited has no effect on the direction of Bancolombia i.e., Bancolombia and OM Holdings go up and down completely randomly.
Pair Corralation between Bancolombia and OM Holdings
Considering the 90-day investment horizon Bancolombia SA ADR is expected to generate 0.71 times more return on investment than OM Holdings. However, Bancolombia SA ADR is 1.41 times less risky than OM Holdings. It trades about 0.05 of its potential returns per unit of risk. OM Holdings Limited is currently generating about -0.04 per unit of risk. If you would invest 2,372 in Bancolombia SA ADR on August 27, 2024 and sell it today you would earn a total of 907.00 from holding Bancolombia SA ADR or generate 38.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bancolombia SA ADR vs. OM Holdings Limited
Performance |
| Timeline |
| Bancolombia SA ADR |
| OM Holdings Limited |
Bancolombia and OM Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bancolombia and OM Holdings
The main advantage of trading using opposite Bancolombia and OM Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bancolombia position performs unexpectedly, OM Holdings 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 OM Holdings will offset losses from the drop in OM Holdings' long position.| Bancolombia vs. Banco De Chile | Bancolombia vs. Banco Bradesco SA | Bancolombia vs. Banco Santander Chile | Bancolombia vs. Intercorp Financial Services |
Check out your portfolio center.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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