Correlation Between Ecopetrol and Mymetics Corp

Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Mymetics Corp 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 Mymetics Corp 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 Mymetics Corp, you can compare the effects of market volatilities on Ecopetrol and Mymetics Corp 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 Mymetics Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Mymetics Corp.

Diversification Opportunities for Ecopetrol and Mymetics Corp

0.0

Correlation Coefficient

Ecopetrol  Mymetics Corp

Pay attention - limited upside

The 3 months correlation between Ecopetrol and Mymetics is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Mymetics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mymetics Corp 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 Mymetics Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mymetics Corp has no effect on the direction of Ecopetrol i.e., Ecopetrol and Mymetics Corp go up and down completely randomly.

Pair Corralation between Ecopetrol and Mymetics Corp

Allowing for the 90-day total investment horizon Ecopetrol is expected to generate 56.17 times less return on investment than Mymetics Corp. But when comparing it to its historical volatility, Ecopetrol SA ADR is 25.5 times less risky than Mymetics Corp. It trades about 0.02 of its potential returns per unit of risk. Mymetics Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2.20  in Mymetics Corp on October 6, 2024 and sell it today you would lose (2.10) from holding Mymetics Corp or give up 95.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.16%
Values	Daily Returns

Ecopetrol SA ADR  vs.  Mymetics Corp

Ecopetrol SA ADR

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Ecopetrol SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Mymetics Corp

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Mymetics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Mymetics Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ecopetrol and Mymetics Corp

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

The idea behind Ecopetrol SA ADR and Mymetics Corp 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.