Correlation Between Bancolombia and Tytan Holdings

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

Diversification Opportunities for Bancolombia and Tytan Holdings

-0.58

Correlation Coefficient

Bancolombia  Tytan Holdings

Excellent diversification

The 3 months correlation between Bancolombia and Tytan is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bancolombia SA ADR and Tytan Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tytan Holdings 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 Tytan Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tytan Holdings has no effect on the direction of Bancolombia i.e., Bancolombia and Tytan Holdings go up and down completely randomly.

Pair Corralation between Bancolombia and Tytan Holdings

Considering the 90-day investment horizon Bancolombia is expected to generate 478.16 times less return on investment than Tytan Holdings. But when comparing it to its historical volatility, Bancolombia SA ADR is 61.14 times less risky than Tytan Holdings. It trades about 0.01 of its potential returns per unit of risk. Tytan Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.40  in Tytan Holdings on October 4, 2024 and sell it today you would lose (0.38) from holding Tytan Holdings or give up 95.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Bancolombia SA ADR  vs.  Tytan Holdings

Bancolombia SA ADR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bancolombia SA ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Bancolombia is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Tytan Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tytan Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bancolombia and Tytan Holdings

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

The idea behind Bancolombia SA ADR and Tytan Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.