Correlation Between Ecopetrol and ASTELLAS PHARMA

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

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

Diversification Opportunities for Ecopetrol and ASTELLAS PHARMA

-0.42

Correlation Coefficient

Ecopetrol  ASTELLAS PHARMA

Very good diversification

The 3 months correlation between Ecopetrol and ASTELLAS is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA and ASTELLAS PHARMA UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTELLAS PHARMA 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 ASTELLAS PHARMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTELLAS PHARMA UNSPADR has no effect on the direction of Ecopetrol i.e., Ecopetrol and ASTELLAS PHARMA go up and down completely randomly.

Pair Corralation between Ecopetrol and ASTELLAS PHARMA

Assuming the 90 days trading horizon Ecopetrol SA is expected to generate 1.0 times more return on investment than ASTELLAS PHARMA. However, Ecopetrol is 1.0 times more volatile than ASTELLAS PHARMA UNSPADR. It trades about 0.02 of its potential returns per unit of risk. ASTELLAS PHARMA UNSPADR is currently generating about 0.01 per unit of risk. If you would invest  744.00  in Ecopetrol SA on April 23, 2025 and sell it today you would earn a total of  8.00  from holding Ecopetrol SA or generate 1.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Ecopetrol SA  vs.  ASTELLAS PHARMA UNSPADR

Ecopetrol SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ecopetrol SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ecopetrol is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ASTELLAS PHARMA UNSPADR

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ecopetrol and ASTELLAS PHARMA

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

The idea behind Ecopetrol SA and ASTELLAS PHARMA 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.