Correlation Between Ecopetrol and Chicken Soup
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Chicken Soup 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 Chicken Soup 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 Chicken Soup For, you can compare the effects of market volatilities on Ecopetrol and Chicken Soup 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 Chicken Soup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Chicken Soup.
Diversification Opportunities for Ecopetrol and Chicken Soup
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecopetrol and Chicken is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Chicken Soup For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicken Soup For 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 Chicken Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicken Soup For has no effect on the direction of Ecopetrol i.e., Ecopetrol and Chicken Soup go up and down completely randomly.
Pair Corralation between Ecopetrol and Chicken Soup
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to generate 0.16 times more return on investment than Chicken Soup. However, Ecopetrol SA ADR is 6.09 times less risky than Chicken Soup. It trades about -0.01 of its potential returns per unit of risk. Chicken Soup For is currently generating about -0.14 per unit of risk. If you would invest 955.00 in Ecopetrol SA ADR on October 25, 2024 and sell it today you would lose (113.00) from holding Ecopetrol SA ADR or give up 11.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 55.19% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. Chicken Soup For
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Chicken Soup For |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ecopetrol and Chicken Soup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Chicken Soup
The main advantage of trading using opposite Ecopetrol and Chicken Soup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Chicken Soup 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 Chicken Soup will offset losses from the drop in Chicken Soup's long position.| Ecopetrol vs. Petroleo Brasileiro Petrobras | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Eni SpA ADR | Ecopetrol vs. Cenovus Energy |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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