Correlation Between Ecopetrol and INFICON Holding
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and INFICON Holding 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 INFICON Holding 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 INFICON Holding AG, you can compare the effects of market volatilities on Ecopetrol and INFICON Holding 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 INFICON Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and INFICON Holding.
Diversification Opportunities for Ecopetrol and INFICON Holding
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ecopetrol and INFICON is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and INFICON Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INFICON Holding AG 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 INFICON Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INFICON Holding AG has no effect on the direction of Ecopetrol i.e., Ecopetrol and INFICON Holding go up and down completely randomly.
Pair Corralation between Ecopetrol and INFICON Holding
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to under-perform the INFICON Holding. But the stock apears to be less risky and, when comparing its historical volatility, Ecopetrol SA ADR is 1.28 times less risky than INFICON Holding. The stock trades about -0.07 of its potential returns per unit of risk. The INFICON Holding AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 105,665 in INFICON Holding AG on September 12, 2024 and sell it today you would earn a total of 20,335 from holding INFICON Holding AG or generate 19.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. INFICON Holding AG
Performance |
| Timeline |
| Ecopetrol SA ADR |
| INFICON Holding AG |
Ecopetrol and INFICON Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and INFICON Holding
The main advantage of trading using opposite Ecopetrol and INFICON Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, INFICON Holding 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 INFICON Holding will offset losses from the drop in INFICON Holding's long position.| Ecopetrol vs. Victory Integrity Smallmid Cap | Ecopetrol vs. Hilton Worldwide Holdings | Ecopetrol vs. NVIDIA | Ecopetrol vs. JPMorgan Chase Co |
| INFICON Holding vs. NH Foods Ltd | INFICON Holding vs. Lifevantage | INFICON Holding vs. Tyson Foods | INFICON Holding vs. Morgan Stanley |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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