Correlation Between Ecopetrol and Bank Mandiri
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Bank Mandiri 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 Mandiri 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 Mandiri Persero, you can compare the effects of market volatilities on Ecopetrol and Bank Mandiri 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 Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Bank Mandiri.
Diversification Opportunities for Ecopetrol and Bank Mandiri
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ecopetrol and Bank is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Bank Mandiri Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Mandiri Persero 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 Mandiri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Mandiri Persero has no effect on the direction of Ecopetrol i.e., Ecopetrol and Bank Mandiri go up and down completely randomly.
Pair Corralation between Ecopetrol and Bank Mandiri
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to generate 1.04 times more return on investment than Bank Mandiri. However, Ecopetrol is 1.04 times more volatile than Bank Mandiri Persero. It trades about 0.04 of its potential returns per unit of risk. Bank Mandiri Persero is currently generating about 0.0 per unit of risk. If you would invest 785.00 in Ecopetrol SA ADR on November 27, 2024 and sell it today you would earn a total of 237.50 from holding Ecopetrol SA ADR or generate 30.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. Bank Mandiri Persero
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Bank Mandiri Persero |
Ecopetrol and Bank Mandiri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Bank Mandiri
The main advantage of trading using opposite Ecopetrol and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Bank Mandiri 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 Mandiri will offset losses from the drop in Bank Mandiri's long position.| Ecopetrol vs. Petroleo Brasileiro Petrobras | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Eni SpA ADR | Ecopetrol vs. Cenovus Energy |
| Bank Mandiri vs. Bank Rakyat | Bank Mandiri vs. Eurobank Ergasias Services | Bank Mandiri vs. Nedbank Group | Bank Mandiri vs. Standard Bank Group |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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