Correlation Between Ecopetrol and Ambu A/S
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Ambu A/S 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 Ecopetrol and Ambu A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecopetrol SA ADR and Ambu AS, you can compare the effects of market volatilities on Ecopetrol and Ambu A/S 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 Ecopetrol with a short position of Ambu A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Ambu A/S.
Diversification Opportunities for Ecopetrol and Ambu A/S
Very good diversification
The 3 months correlation between Ecopetrol and Ambu is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Ambu AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambu A/S and Ecopetrol 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 Ecopetrol SA ADR are associated (or correlated) with Ambu A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambu A/S has no effect on the direction of Ecopetrol i.e., Ecopetrol and Ambu A/S go up and down completely randomly.
Pair Corralation between Ecopetrol and Ambu A/S
Allowing for the 90-day total investment horizon Ecopetrol is expected to generate 1.38 times less return on investment than Ambu A/S. But when comparing it to its historical volatility, Ecopetrol SA ADR is 1.34 times less risky than Ambu A/S. It trades about 0.04 of its potential returns per unit of risk. Ambu AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,435 in Ambu AS on August 26, 2024 and sell it today you would earn a total of 555.00 from holding Ambu AS or generate 38.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. Ambu AS
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Ambu A/S |
Ecopetrol and Ambu A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Ambu A/S
The main advantage of trading using opposite Ecopetrol and Ambu A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Ambu A/S 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 Ambu A/S will offset losses from the drop in Ambu A/S's long position.| Ecopetrol vs. Shell PLC ADR | Ecopetrol vs. Suncor Energy | Ecopetrol vs. Cenovus Energy | Ecopetrol vs. Petrleo Brasileiro SA |
| Ambu A/S vs. Rezolute | Ambu A/S vs. Tempest Therapeutics | Ambu A/S vs. Forte Biosciences | Ambu A/S vs. Dyadic International |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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