Correlation Between Bancolombia and Orix Corp

Can any of the company-specific risk be diversified away by investing in both Bancolombia and Orix Corp 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 Orix Corp 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 Orix Corp Ads, you can compare the effects of market volatilities on Bancolombia and Orix Corp 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 Orix Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bancolombia and Orix Corp.

Diversification Opportunities for Bancolombia and Orix Corp

-0.09

Correlation Coefficient

Bancolombia  Orix Corp

Good diversification

The 3 months correlation between Bancolombia and Orix is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bancolombia SA ADR and Orix Corp Ads in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orix Corp Ads 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 Orix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orix Corp Ads has no effect on the direction of Bancolombia i.e., Bancolombia and Orix Corp go up and down completely randomly.

Pair Corralation between Bancolombia and Orix Corp

Considering the 90-day investment horizon Bancolombia SA ADR is expected to generate 1.28 times more return on investment than Orix Corp. However, Bancolombia is 1.28 times more volatile than Orix Corp Ads. It trades about 0.05 of its potential returns per unit of risk. Orix Corp Ads is currently generating about 0.05 per unit of risk. If you would invest  2,280  in Bancolombia SA ADR on September 26, 2024 and sell it today you would earn a total of  949.00  from holding Bancolombia SA ADR or generate 41.62% 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.  Orix Corp Ads

Bancolombia SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bancolombia SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Bancolombia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Orix Corp Ads

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orix Corp Ads has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bancolombia and Orix Corp

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

The idea behind Bancolombia SA ADR and Orix Corp Ads 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.