Correlation Between Samsung Electronics and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Samsung 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 Samsung Electronics and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Ecopetrol SA ADR, you can compare the effects of market volatilities on Samsung 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 Samsung Electronics with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Ecopetrol.
Diversification Opportunities for Samsung Electronics and Ecopetrol
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Ecopetrol is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Ecopetrol SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopetrol SA ADR and Samsung 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 Samsung 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 ADR has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Ecopetrol go up and down completely randomly.
Pair Corralation between Samsung Electronics and Ecopetrol
Assuming the 90 days horizon Samsung Electronics Co is expected to generate 0.04 times more return on investment than Ecopetrol. However, Samsung Electronics Co is 26.48 times less risky than Ecopetrol. It trades about 0.1 of its potential returns per unit of risk. Ecopetrol SA ADR is currently generating about -0.03 per unit of risk. If you would invest 4,007 in Samsung Electronics Co on September 1, 2024 and sell it today you would earn a total of 53.00 from holding Samsung Electronics Co or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Ecopetrol SA ADR
Performance |
| Timeline |
| Samsung Electronics |
| Ecopetrol SA ADR |
Samsung Electronics and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Ecopetrol
The main advantage of trading using opposite Samsung Electronics and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung 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.| Samsung Electronics vs. Universal Electronics | Samsung Electronics vs. Vizio Holding Corp | Samsung Electronics vs. VOXX International | Samsung Electronics vs. Sony Group Corp |
| Ecopetrol vs. Shell PLC ADR | Ecopetrol vs. BP PLC ADR | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Petrleo Brasileiro SA |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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