Correlation Between Ecopetrol and Heidelberg Materials
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Heidelberg Materials 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 Heidelberg Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecopetrol SA and Heidelberg Materials AG, you can compare the effects of market volatilities on Ecopetrol and Heidelberg Materials 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 Heidelberg Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Heidelberg Materials.
Diversification Opportunities for Ecopetrol and Heidelberg Materials
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecopetrol and Heidelberg is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA and Heidelberg Materials AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Materials 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 are associated (or correlated) with Heidelberg Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heidelberg Materials has no effect on the direction of Ecopetrol i.e., Ecopetrol and Heidelberg Materials go up and down completely randomly.
Pair Corralation between Ecopetrol and Heidelberg Materials
Assuming the 90 days trading horizon Ecopetrol SA is expected to under-perform the Heidelberg Materials. In addition to that, Ecopetrol is 1.48 times more volatile than Heidelberg Materials AG. It trades about -0.09 of its total potential returns per unit of risk. Heidelberg Materials AG is currently generating about 0.02 per unit of volatility. If you would invest 11,830 in Heidelberg Materials AG on September 22, 2024 and sell it today you would earn a total of 65.00 from holding Heidelberg Materials AG or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopetrol SA vs. Heidelberg Materials AG
Performance |
| Timeline |
| Ecopetrol SA |
| Heidelberg Materials |
Ecopetrol and Heidelberg Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Heidelberg Materials
The main advantage of trading using opposite Ecopetrol and Heidelberg Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Heidelberg Materials 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 Heidelberg Materials will offset losses from the drop in Heidelberg Materials' long position.The idea behind Ecopetrol SA and Heidelberg Materials AG 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.| Heidelberg Materials vs. Apple Inc | Heidelberg Materials vs. Apple Inc | Heidelberg Materials vs. Apple Inc | Heidelberg Materials vs. Apple Inc |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Commodity Directory Find actively traded commodities issued by global exchanges |