Correlation Between Ecopetrol and Breeze Holdings

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

Diversification Opportunities for Ecopetrol and Breeze Holdings

-0.83

Correlation Coefficient

Ecopetrol  Breeze Holdings

Pay attention - limited upside

The 3 months correlation between Ecopetrol and Breeze is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Breeze Holdings Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Breeze Holdings Acqu 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 Breeze Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Breeze Holdings Acqu has no effect on the direction of Ecopetrol i.e., Ecopetrol and Breeze Holdings go up and down completely randomly.

Pair Corralation between Ecopetrol and Breeze Holdings

If you would invest  761.00  in Ecopetrol SA ADR on September 4, 2024 and sell it today you would earn a total of  36.00  from holding Ecopetrol SA ADR or generate 4.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

Ecopetrol SA ADR  vs.  Breeze Holdings Acquisition

Ecopetrol SA ADR

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Breeze Holdings Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Breeze Holdings Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Breeze Holdings is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ecopetrol and Breeze Holdings

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

The idea behind Ecopetrol SA ADR and Breeze Holdings Acquisition 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.