Correlation Between Ecopetrol and AiXin Life
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and AiXin Life 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 AiXin Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecopetrol SA ADR and AiXin Life International, you can compare the effects of market volatilities on Ecopetrol and AiXin Life 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 AiXin Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and AiXin Life.
Diversification Opportunities for Ecopetrol and AiXin Life
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecopetrol and AiXin is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and AiXin Life International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AiXin Life International 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 ADR are associated (or correlated) with AiXin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AiXin Life International has no effect on the direction of Ecopetrol i.e., Ecopetrol and AiXin Life go up and down completely randomly.
Pair Corralation between Ecopetrol and AiXin Life
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to under-perform the AiXin Life. But the stock apears to be less risky and, when comparing its historical volatility, Ecopetrol SA ADR is 66.92 times less risky than AiXin Life. The stock trades about -0.07 of its potential returns per unit of risk. The AiXin Life International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 27.00 in AiXin Life International on September 12, 2024 and sell it today you would lose (25.30) from holding AiXin Life International or give up 93.7% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Ecopetrol SA ADR vs. AiXin Life International
Performance |
Timeline |
Ecopetrol SA ADR |
AiXin Life International |
Ecopetrol and AiXin Life Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ecopetrol and AiXin Life
The main advantage of trading using opposite Ecopetrol and AiXin Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, AiXin Life 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 AiXin Life will offset losses from the drop in AiXin Life's long position.Ecopetrol vs. Victory Integrity Smallmid Cap | Ecopetrol vs. Hilton Worldwide Holdings | Ecopetrol vs. NVIDIA | Ecopetrol vs. JPMorgan Chase Co |
AiXin Life vs. Bunzl plc | AiXin Life vs. Wanderport Corp | AiXin Life vs. Innovative Food Hldg | AiXin Life vs. Calavo Growers |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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