Correlation Between Ecopetrol and Comera Life

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

Diversification Opportunities for Ecopetrol and Comera Life

0.65

Correlation Coefficient

Ecopetrol  Comera Life

Poor diversification

The 3 months correlation between Ecopetrol and Comera is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Comera Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comera Life Sciences 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 Comera Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comera Life Sciences has no effect on the direction of Ecopetrol i.e., Ecopetrol and Comera Life go up and down completely randomly.

Pair Corralation between Ecopetrol and Comera Life

Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to generate 0.31 times more return on investment than Comera Life. However, Ecopetrol SA ADR is 3.28 times less risky than Comera Life. It trades about 0.03 of its potential returns per unit of risk. Comera Life Sciences is currently generating about -0.04 per unit of risk. If you would invest  633.00  in Ecopetrol SA ADR on September 1, 2024 and sell it today you would earn a total of  170.00  from holding Ecopetrol SA ADR or generate 26.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	31.11%
Values	Daily Returns

Ecopetrol SA ADR  vs.  Comera Life Sciences

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 conflicting performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Comera Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comera Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Comera Life is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ecopetrol and Comera Life

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

The idea behind Ecopetrol SA ADR and Comera Life Sciences 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.