Correlation Between Ecopetrol and ANI Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Ecopetrol and ANI Pharmaceuticals 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 ANI Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ecopetrol SA and ANI Pharmaceuticals, you can compare the effects of market volatilities on Ecopetrol and ANI Pharmaceuticals 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 ANI Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and ANI Pharmaceuticals.

Diversification Opportunities for Ecopetrol and ANI Pharmaceuticals

-0.35

Correlation Coefficient

Ecopetrol  ANI Pharmaceuticals

Very good diversification

The 3 months correlation between Ecopetrol and ANI is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA and ANI Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANI Pharmaceuticals 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 ANI Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANI Pharmaceuticals has no effect on the direction of Ecopetrol i.e., Ecopetrol and ANI Pharmaceuticals go up and down completely randomly.

Pair Corralation between Ecopetrol and ANI Pharmaceuticals

Assuming the 90 days trading horizon Ecopetrol SA is expected to generate 1.14 times more return on investment than ANI Pharmaceuticals. However, Ecopetrol is 1.14 times more volatile than ANI Pharmaceuticals. It trades about 0.01 of its potential returns per unit of risk. ANI Pharmaceuticals is currently generating about -0.05 per unit of risk. If you would invest  754.00  in Ecopetrol SA on April 23, 2025 and sell it today you would lose (2.00) from holding Ecopetrol SA or give up 0.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ecopetrol SA  vs.  ANI Pharmaceuticals

Ecopetrol SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ecopetrol SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Ecopetrol is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ANI Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days ANI Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ecopetrol and ANI Pharmaceuticals

The main advantage of trading using opposite Ecopetrol and ANI Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, ANI Pharmaceuticals 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 ANI Pharmaceuticals will offset losses from the drop in ANI Pharmaceuticals' long position.

The idea behind Ecopetrol SA and ANI Pharmaceuticals 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.