Correlation Between Aegean Airlines and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Aegean Airlines and Ecopetrol 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 Aegean Airlines and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aegean Airlines SA and Ecopetrol SA ADR, you can compare the effects of market volatilities on Aegean Airlines and Ecopetrol 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 Aegean Airlines with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegean Airlines and Ecopetrol.
Diversification Opportunities for Aegean Airlines and Ecopetrol
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aegean and Ecopetrol is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Ecopetrol SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopetrol SA ADR and Aegean Airlines 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 Aegean Airlines SA are associated (or correlated) with Ecopetrol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopetrol SA ADR has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Ecopetrol go up and down completely randomly.
Pair Corralation between Aegean Airlines and Ecopetrol
Assuming the 90 days horizon Aegean Airlines SA is expected to under-perform the Ecopetrol. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aegean Airlines SA is 1.15 times less risky than Ecopetrol. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Ecopetrol SA ADR is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,041 in Ecopetrol SA ADR on August 24, 2024 and sell it today you would lose (204.50) from holding Ecopetrol SA ADR or give up 19.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Aegean Airlines SA vs. Ecopetrol SA ADR
Performance |
| Timeline |
| Aegean Airlines SA |
| Ecopetrol SA ADR |
Aegean Airlines and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegean Airlines and Ecopetrol
The main advantage of trading using opposite Aegean Airlines and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegean Airlines position performs unexpectedly, Ecopetrol 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 Ecopetrol will offset losses from the drop in Ecopetrol's long position.| Aegean Airlines vs. Copa Holdings SA | Aegean Airlines vs. United Airlines Holdings | Aegean Airlines vs. Delta Air Lines | Aegean Airlines vs. SkyWest |
| Ecopetrol vs. Eshallgo Class A | Ecopetrol vs. Amtech Systems | Ecopetrol vs. Gold Fields Ltd | Ecopetrol vs. Aegean Airlines SA |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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