Correlation Between Ecopetrol and SARTORIUS

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Can any of the company-specific risk be diversified away by investing in both Ecopetrol and SARTORIUS 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 SARTORIUS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecopetrol SA and SARTORIUS AG UNSPADR, you can compare the effects of market volatilities on Ecopetrol and SARTORIUS 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 SARTORIUS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and SARTORIUS.

Diversification Opportunities for Ecopetrol and SARTORIUS

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Ecopetrol and SARTORIUS is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA and SARTORIUS AG UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SARTORIUS AG UNSPADR 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 SARTORIUS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SARTORIUS AG UNSPADR has no effect on the direction of Ecopetrol i.e., Ecopetrol and SARTORIUS go up and down completely randomly.

Pair Corralation between Ecopetrol and SARTORIUS

Assuming the 90 days trading horizon Ecopetrol SA is expected to generate 1.2 times more return on investment than SARTORIUS. However, Ecopetrol is 1.2 times more volatile than SARTORIUS AG UNSPADR. It trades about 0.01 of its potential returns per unit of risk. SARTORIUS AG UNSPADR is currently generating about -0.04 per unit of risk. If you would invest  754.00  in Ecopetrol SA on April 22, 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 Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Ecopetrol SA  vs.  SARTORIUS AG UNSPADR

 Performance 
       Timeline  
Ecopetrol SA 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
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.
SARTORIUS AG UNSPADR 

Risk-Adjusted Performance

Very Weak

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

Ecopetrol and SARTORIUS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ecopetrol and SARTORIUS

The main advantage of trading using opposite Ecopetrol and SARTORIUS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, SARTORIUS 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 SARTORIUS will offset losses from the drop in SARTORIUS's long position.
The idea behind Ecopetrol SA and SARTORIUS AG UNSPADR 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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