Correlation Between Bancolombia and Woori Financial

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

Diversification Opportunities for Bancolombia and Woori Financial

0.86

Correlation Coefficient

Bancolombia  Woori Financial

Very poor diversification

The 3 months correlation between Bancolombia and Woori is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bancolombia SA ADR and Woori Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Financial Group 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 Woori Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Financial Group has no effect on the direction of Bancolombia i.e., Bancolombia and Woori Financial go up and down completely randomly.

Pair Corralation between Bancolombia and Woori Financial

Considering the 90-day investment horizon Bancolombia is expected to generate 3.61 times less return on investment than Woori Financial. But when comparing it to its historical volatility, Bancolombia SA ADR is 1.3 times less risky than Woori Financial. It trades about 0.08 of its potential returns per unit of risk. Woori Financial Group is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,781  in Woori Financial Group on May 6, 2025 and sell it today you would earn a total of  1,362  from holding Woori Financial Group or generate 36.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Bancolombia SA ADR  vs.  Woori Financial Group

Bancolombia SA ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bancolombia SA ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting forward indicators, Bancolombia may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Woori Financial Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Financial Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Woori Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bancolombia and Woori Financial

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

The idea behind Bancolombia SA ADR and Woori Financial Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.