Correlation Between Andritz AG and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Andritz AG 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 Andritz AG and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Andritz AG and Ecopetrol SA ADR, you can compare the effects of market volatilities on Andritz AG 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 Andritz AG with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andritz AG and Ecopetrol.
Diversification Opportunities for Andritz AG and Ecopetrol
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Andritz and Ecopetrol is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Andritz AG 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 Andritz AG 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 Andritz AG 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 Andritz AG i.e., Andritz AG and Ecopetrol go up and down completely randomly.
Pair Corralation between Andritz AG and Ecopetrol
Assuming the 90 days horizon Andritz AG is expected to generate 0.98 times more return on investment than Ecopetrol. However, Andritz AG is 1.02 times less risky than Ecopetrol. It trades about 0.05 of its potential returns per unit of risk. Ecopetrol SA ADR is currently generating about 0.05 per unit of risk. If you would invest 3,783 in Andritz AG on January 25, 2024 and sell it today you would earn a total of 2,237 from holding Andritz AG or generate 59.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Andritz AG vs. Ecopetrol SA ADR
Performance |
| Timeline |
| Andritz AG |
| Ecopetrol SA ADR |
Andritz AG and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Andritz AG and Ecopetrol
The main advantage of trading using opposite Andritz AG and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andritz AG 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.| Andritz AG vs. Core Main | Andritz AG vs. MSC Industrial Direct | Andritz AG vs. Watsco Inc | Andritz AG vs. Ferguson Plc |
| Ecopetrol vs. Petroleo Brasileiro Petrobras | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Eni SpA ADR | Ecopetrol vs. Cenovus Energy |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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