Correlation Between Ecopetrol and Bank Rakyat
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Bank Rakyat 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 Bank Rakyat 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 Bank Rakyat, you can compare the effects of market volatilities on Ecopetrol and Bank Rakyat 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 Bank Rakyat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Bank Rakyat.
Diversification Opportunities for Ecopetrol and Bank Rakyat
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ecopetrol and Bank is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat 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 Bank Rakyat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Rakyat has no effect on the direction of Ecopetrol i.e., Ecopetrol and Bank Rakyat go up and down completely randomly.
Pair Corralation between Ecopetrol and Bank Rakyat
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to generate 0.95 times more return on investment than Bank Rakyat. However, Ecopetrol SA ADR is 1.05 times less risky than Bank Rakyat. It trades about -0.03 of its potential returns per unit of risk. Bank Rakyat is currently generating about -0.09 per unit of risk. If you would invest 930.00 in Ecopetrol SA ADR on September 1, 2024 and sell it today you would lose (127.00) from holding Ecopetrol SA ADR or give up 13.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. Bank Rakyat
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Bank Rakyat |
Ecopetrol and Bank Rakyat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Bank Rakyat
The main advantage of trading using opposite Ecopetrol and Bank Rakyat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Bank Rakyat 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 Bank Rakyat will offset losses from the drop in Bank Rakyat's long position.| Ecopetrol vs. Shell PLC ADR | Ecopetrol vs. BP PLC ADR | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Petrleo Brasileiro SA |
| Bank Rakyat vs. Piraeus Bank SA | Bank Rakyat vs. Turkiye Garanti Bankasi | Bank Rakyat vs. Delhi Bank Corp | Bank Rakyat vs. Uwharrie Capital Corp |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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