Correlation Between Bancolombia and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both Bancolombia and Shinhan Financial 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 Shinhan Financial 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 Shinhan Financial Group, you can compare the effects of market volatilities on Bancolombia and Shinhan Financial 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 Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bancolombia and Shinhan Financial.
Diversification Opportunities for Bancolombia and Shinhan Financial
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bancolombia and Shinhan is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bancolombia SA ADR and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial 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 Shinhan Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Financial has no effect on the direction of Bancolombia i.e., Bancolombia and Shinhan Financial go up and down completely randomly.
Pair Corralation between Bancolombia and Shinhan Financial
Considering the 90-day investment horizon Bancolombia is expected to generate 5.94 times less return on investment than Shinhan Financial. But when comparing it to its historical volatility, Bancolombia SA ADR is 1.42 times less risky than Shinhan Financial. It trades about 0.01 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,446 in Shinhan Financial Group on September 3, 2024 and sell it today you would earn a total of 412.00 from holding Shinhan Financial Group or generate 11.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bancolombia SA ADR vs. Shinhan Financial Group
Performance |
| Timeline |
| Bancolombia SA ADR |
| Shinhan Financial |
Bancolombia and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bancolombia and Shinhan Financial
The main advantage of trading using opposite Bancolombia and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bancolombia position performs unexpectedly, Shinhan Financial 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 Shinhan Financial will offset losses from the drop in Shinhan Financial's long position.| Bancolombia vs. Banco De Chile | Bancolombia vs. Banco Bradesco SA | Bancolombia vs. Banco Santander Chile | Bancolombia vs. Intercorp Financial Services |
| Shinhan Financial vs. JPMorgan Chase Co | Shinhan Financial vs. Citigroup | Shinhan Financial vs. Wells Fargo | Shinhan Financial vs. Toronto Dominion Bank |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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