Correlation Between Meiko Electronics and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Meiko Electronics and Ecopetrol 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 Meiko Electronics and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meiko Electronics Co and Ecopetrol SA, you can compare the effects of market volatilities on Meiko Electronics and Ecopetrol 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 Meiko Electronics with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meiko Electronics and Ecopetrol.
Diversification Opportunities for Meiko Electronics and Ecopetrol
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meiko and Ecopetrol is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Meiko Electronics Co and Ecopetrol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopetrol SA and Meiko Electronics 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 Meiko Electronics Co are associated (or correlated) with Ecopetrol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopetrol SA has no effect on the direction of Meiko Electronics i.e., Meiko Electronics and Ecopetrol go up and down completely randomly.
Pair Corralation between Meiko Electronics and Ecopetrol
Assuming the 90 days horizon Meiko Electronics Co is expected to generate 1.99 times more return on investment than Ecopetrol. However, Meiko Electronics is 1.99 times more volatile than Ecopetrol SA. It trades about 0.2 of its potential returns per unit of risk. Ecopetrol SA is currently generating about -0.14 per unit of risk. If you would invest 3,340 in Meiko Electronics Co on August 25, 2024 and sell it today you would earn a total of 1,910 from holding Meiko Electronics Co or generate 57.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meiko Electronics Co vs. Ecopetrol SA
Performance |
| Timeline |
| Meiko Electronics |
| Ecopetrol SA |
Meiko Electronics and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meiko Electronics and Ecopetrol
The main advantage of trading using opposite Meiko Electronics and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiko Electronics position performs unexpectedly, Ecopetrol 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 Ecopetrol will offset losses from the drop in Ecopetrol's long position.| Meiko Electronics vs. Benchmark Electronics | Meiko Electronics vs. Superior Plus Corp | Meiko Electronics vs. NMI Holdings | Meiko Electronics vs. Origin Agritech |
| Ecopetrol vs. Norwegian Air Shuttle | Ecopetrol vs. UMC Electronics Co | Ecopetrol vs. Meiko Electronics Co | Ecopetrol vs. METHODE ELECTRONICS |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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