Correlation Between Ecopetrol and SEALSQ Corp

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Can any of the company-specific risk be diversified away by investing in both Ecopetrol and SEALSQ Corp 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 SEALSQ Corp 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 SEALSQ Corp, you can compare the effects of market volatilities on Ecopetrol and SEALSQ Corp 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 SEALSQ Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and SEALSQ Corp.

Diversification Opportunities for Ecopetrol and SEALSQ Corp

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ecopetrol and SEALSQ is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and SEALSQ Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALSQ Corp 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 SEALSQ Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEALSQ Corp has no effect on the direction of Ecopetrol i.e., Ecopetrol and SEALSQ Corp go up and down completely randomly.

Pair Corralation between Ecopetrol and SEALSQ Corp

Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to generate 0.19 times more return on investment than SEALSQ Corp. However, Ecopetrol SA ADR is 5.25 times less risky than SEALSQ Corp. It trades about 0.01 of its potential returns per unit of risk. SEALSQ Corp is currently generating about -0.05 per unit of risk. If you would invest  778.00  in Ecopetrol SA ADR on August 31, 2024 and sell it today you would earn a total of  25.00  from holding Ecopetrol SA ADR or generate 3.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ecopetrol SA ADR  vs.  SEALSQ Corp

 Performance 
       Timeline  
Ecopetrol SA ADR 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Ecopetrol SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
SEALSQ Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SEALSQ Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ecopetrol and SEALSQ Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ecopetrol and SEALSQ Corp

The main advantage of trading using opposite Ecopetrol and SEALSQ Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, SEALSQ Corp 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 SEALSQ Corp will offset losses from the drop in SEALSQ Corp's long position.
The idea behind Ecopetrol SA ADR and SEALSQ Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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