Ecopetrol Sa Adr Stock Volatility

EC Stock  USD 11.84  0.51  4.50%   
Ecopetrol SA ADR secures Sharpe Ratio (or Efficiency) of -0.0431, which denotes the company had a -0.0431% return per unit of risk over the last 3 months. Ecopetrol SA ADR exposes twenty-two different technical indicators, which can help you to evaluate volatility embedded in its price movement. Please confirm Ecopetrol's Standard Deviation of 1.6, mean deviation of 1.23, and Variance of 2.56 to check the risk estimate we provide. Key indicators related to Ecopetrol's volatility include:
30 Days Market Risk
Chance Of Distress
30 Days Economic Sensitivity
Ecopetrol Stock volatility depicts how high the prices fluctuate around the mean (or its average) price. In other words, it is a statistical measure of the distribution of Ecopetrol daily returns, and it is calculated using variance and standard deviation. We also use Ecopetrol's beta, its sensitivity to the market, as well as its odds of financial distress to provide a more practical estimation of Ecopetrol volatility.
  
Since volatility provides investors with entry points to take advantage of stock prices, companies, such as Ecopetrol can benefit from it. Downward market volatility can be a perfect environment for investors who play the long game. Here, they may decide to buy additional stocks of Ecopetrol at lower prices. For example, an investor can purchase Ecopetrol stock that has halved in price over a short period. This will lower your average cost per share, thereby improving your portfolio's performance when the markets normalize. Similarly, when the prices of Ecopetrol's stock rises, investors can sell out and invest the proceeds in other equities with better opportunities. Investing when markets are volatile with better valuations will accord both investors and companies the opportunity to generate better long-term returns.

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Ecopetrol Market Sensitivity And Downside Risk

Ecopetrol's beta coefficient measures the volatility of Ecopetrol stock compared to the systematic risk of the entire market represented by your selected benchmark. In mathematical terms, beta represents the slope of the line through a regression of data points where each of these points represents Ecopetrol stock's returns against your selected market. In other words, Ecopetrol's beta of 0.85 provides an investor with an approximation of how much risk Ecopetrol stock can potentially add to one of your existing portfolios. Ecopetrol SA ADR exhibits very low volatility with skewness of -0.29 and kurtosis of 0.67. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Ecopetrol's stock risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact Ecopetrol's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different financial instruments as prices fall.
3 Months Beta |Analyze Ecopetrol SA ADR Demand Trend
Check current 90 days Ecopetrol correlation with market (NYSE Composite)

Ecopetrol Beta

    
  0.85  
Ecopetrol standard deviation measures the daily dispersion of prices over your selected time horizon relative to its mean. A typical volatile entity has a high standard deviation, while the deviation of a stable instrument is usually low. As a downside, the standard deviation calculates all uncertainty as risk, even when it is in your favor, such as above-average returns.

Standard Deviation

    
  1.63  
It is essential to understand the difference between upside risk (as represented by Ecopetrol's standard deviation) and the downside risk, which can be measured by semi-deviation or downside deviation of Ecopetrol's daily returns or price. Since the actual investment returns on holding a position in ecopetrol stock tend to have a non-normal distribution, there will be different probabilities for losses than for gains. The likelihood of losses is reflected in the downside risk of an investment in Ecopetrol.

Using Ecopetrol Put Option to Manage Risk

Put options written on Ecopetrol grant holders of the option the right to sell a specified amount of Ecopetrol at a specified price within a specified time frame. The put buyer has a limited loss and, while not fully unlimited gains, as the price of Ecopetrol Stock cannot fall below zero, the put buyer does gain as the price drops. So, one way investors can hedge Ecopetrol's position is by buying a put option against it. The put option used this way is usually referred to as insurance. If an undesired outcome occurs and loss on holding Ecopetrol will be realized, the loss incurred will be offset by the profits made with the option trade.

Ecopetrol's PUT expiring on 2024-04-19

   Profit   
       Ecopetrol Price At Expiration  

Current Ecopetrol Insurance Chain

DeltaGammaOpen IntExpirationCurrent SpreadLast Price
Put
2024-04-19 PUT at $12.5-0.93440.1362024-04-190.85 - 1.851.45View
Put
2024-04-19 PUT at $10.0-0.09990.17212962024-04-190.0 - 0.050.05View
View All Ecopetrol Options

Ecopetrol SA ADR Stock Volatility Analysis

Volatility refers to the frequency at which Ecopetrol stock price increases or decreases within a specified period. These fluctuations usually indicate the level of risk that's associated with Ecopetrol's price changes. Investors will then calculate the volatility of Ecopetrol's stock to predict their future moves. A stock that has erratic price changes quickly hits new highs, and lows are considered highly volatile. A stock with relatively stable price changes has low volatility. A highly volatile stock is riskier, but the risk cuts both ways. Investing in highly volatile security can either be highly successful, or you may experience significant failure. There are two main types of Ecopetrol's volatility:

Historical Volatility

This type of stock volatility measures Ecopetrol's fluctuations based on previous trends. It's commonly used to predict Ecopetrol's future behavior based on its past. However, it cannot conclusively determine the future direction of the stock.

Implied Volatility

This type of volatility provides a positive outlook on future price fluctuations for Ecopetrol's current market price. This means that the stock will return to its initially predicted market price. This type of volatility can be derived from derivative instruments written on Ecopetrol's to be redeemed at a future date.
Transformation
The output start index for this execution was zero with a total number of output elements of sixty-one. Ecopetrol SA ADR Average Price is the average of the sum of open, high, low and close daily prices of a bar. It can be used to smooth an indicator that normally takes just the closing price as input.

Ecopetrol Projected Return Density Against Market

Allowing for the 90-day total investment horizon Ecopetrol has a beta of 0.8512 suggesting Ecopetrol SA ADR market returns are highly-sensitive to returns on the market. As the market goes up or down, Ecopetrol is expected to follow.
Most traded equities are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or company-specific) risk. Unsystematic risk is the risk that events specific to Ecopetrol or Oil, Gas & Consumable Fuels sector will adversely affect the stock's price. This type of risk can be diversified away by owning several different stocks in different industries whose stock prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that Ecopetrol's price will be affected by overall stock market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a Ecopetrol stock's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision.
Ecopetrol SA ADR has a negative alpha, implying that the risk taken by holding this instrument is not justified. The company is significantly underperforming NYSE Composite.
   Predicted Return Density   
       Returns  
Ecopetrol's volatility is measured either by using standard deviation or beta. Standard deviation will reflect the average amount of how ecopetrol stock's price will differ from the mean after some time.To get its calculation, you should first determine the mean price during the specified period then subtract that from each price point.

What Drives an Ecopetrol Price Volatility?

Several factors can influence a stock's market volatility:

Industry

Specific events can influence volatility within a particular industry. For instance, a significant weather upheaval in a crucial oil-production site may cause oil prices to increase in the oil sector. The direct result will be the rise in the stock price of oil distribution companies. Similarly, any government regulation in a specific industry could negatively influence stock prices due to increased regulations on compliance that may impact the company's future earnings and growth.

Political and Economic environment

When governments make significant decisions regarding trade agreements, policies, and legislation regarding specific industries, they will influence stock prices. Everything from speeches to elections may influence investors, who can directly influence the stock prices in any particular industry. The prevailing economic situation also plays a significant role in stock prices. When the economy is doing well, investors will have a positive reaction and hence, better stock prices and vice versa.

The Company's Performance

Sometimes volatility will only affect an individual company. For example, a revolutionary product launch or strong earnings report may attract many investors to purchase the company. This positive attention will raise the company's stock price. In contrast, product recalls and data breaches may negatively influence a company's stock prices.

Ecopetrol Stock Risk Measures

Allowing for the 90-day total investment horizon the coefficient of variation of Ecopetrol is -2317.66. The daily returns are distributed with a variance of 2.64 and standard deviation of 1.63. The mean deviation of Ecopetrol SA ADR is currently at 1.25. For similar time horizon, the selected benchmark (NYSE Composite) has volatility of 0.56
α
Alpha over NYSE Composite
-0.18
β
Beta against NYSE Composite0.85
σ
Overall volatility
1.63
Ir
Information ratio -0.13

Ecopetrol Stock Return Volatility

Ecopetrol historical daily return volatility represents how much of Ecopetrol stock's daily returns swing around its mean - it is a statistical measure of its dispersion of returns. The firm accepts 1.6254% volatility on return distribution over the 90 days horizon. By contrast, NYSE Composite accepts 0.5689% volatility on return distribution over the 90 days horizon.
 Performance 
       Timeline  

About Ecopetrol Volatility

Volatility is a rate at which the price of Ecopetrol or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Ecopetrol may increase or decrease. In other words, similar to Ecopetrol's beta indicator, it measures the risk of Ecopetrol and helps estimate the fluctuations that may happen in a short period of time. So if prices of Ecopetrol fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.
Last ReportedProjected for 2024
Selling And Marketing Expenses3.4 T3.6 T
Ecopetrol's stock volatility refers to the amount of uncertainty or risk involved with the size of changes in its stock's price. It is a statistical measure of the dispersion of returns on Ecopetrol Stock over a specified period of time, often expressed as the standard deviation of daily returns. In other words, it measures how much Ecopetrol's price varies over time.

3 ways to utilize Ecopetrol's volatility to invest better

Higher Ecopetrol's stock volatility means that the price of its stock is changing rapidly and unpredictably, while lower stock volatility indicates that the price of Ecopetrol SA ADR stock is relatively stable. Investors and traders use stock volatility as an indicator of risk and potential reward, as stocks with higher volatility can offer the potential for more significant returns but also come with a greater risk of losses. Ecopetrol SA ADR stock volatility can provide helpful information for making investment decisions in the following ways:
  • Measuring Risk: Volatility can be used as a measure of risk, which can help you determine the potential fluctuations in the value of Ecopetrol SA ADR investment. A higher volatility means higher risk and potentially larger changes in value.
  • Identifying Opportunities: High volatility in Ecopetrol's stock can indicate that there is potential for significant price movements, either up or down, which could present investment opportunities.
  • Diversification: Understanding how the volatility of Ecopetrol's stock relates to your other investments can help you create a well-diversified portfolio of assets with varying levels of risk.
Remember it's essential to remember that stock volatility is just one of many factors to consider when making investment decisions, and it should be used in conjunction with other fundamental and technical analysis tools.

Ecopetrol Investment Opportunity

Ecopetrol SA ADR has a volatility of 1.63 and is 2.86 times more volatile than NYSE Composite. 14 percent of all equities and portfolios are less risky than Ecopetrol. You can use Ecopetrol SA ADR to enhance the returns of your portfolios. The stock experiences a very speculative upward sentiment. Check odds of Ecopetrol to be traded at $14.8 in 90 days.

Weak diversification

The correlation between Ecopetrol SA ADR and NYA is 0.3 (i.e., Weak diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and NYA in the same portfolio, assuming nothing else is changed.

Ecopetrol Additional Risk Indicators

The analysis of Ecopetrol's secondary risk indicators is one of the essential steps in making a buy or sell decision. The process involves identifying the amount of risk involved in Ecopetrol's investment and either accepting that risk or mitigating it. Along with some common measures of Ecopetrol stock's risk such as standard deviation, beta, or value at risk, we also provide a set of secondary indicators that can assist in the individual investment decision or help in hedging the risk of your existing portfolios.
Please note, the risk measures we provide can be used independently or collectively to perform a risk assessment. When comparing two potential stocks, we recommend comparing similar stocks with homogenous growth potential and valuation from related markets to determine which investment holds the most risk.

Ecopetrol Suggested Diversification Pairs

Pair trading is one of the very effective strategies used by professional day traders and hedge funds capitalizing on short-time and mid-term market inefficiencies. The approach is based on the fact that the ratio of prices of two correlating shares is long-term stable and oscillates around the average value. If the correlation ratio comes outside the common area, you can speculate with a high success rate that the ratio will return to the mean value and collect a profit.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Ecopetrol as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Ecopetrol's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Ecopetrol's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Ecopetrol SA ADR.
When determining whether Ecopetrol SA ADR offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Ecopetrol's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Ecopetrol Sa Adr Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Ecopetrol Sa Adr Stock:
Check out Investing Opportunities to better understand how to build diversified portfolios, which includes a position in Ecopetrol SA ADR. Also, note that the market value of any company could be tightly coupled with the direction of predictive economic indicators such as signals in main economic indicators.
Note that the Ecopetrol SA ADR information on this page should be used as a complementary analysis to other Ecopetrol's statistical models used 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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Is Ecopetrol's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Ecopetrol. If investors know Ecopetrol will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Ecopetrol listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
(0.38)
Earnings Share
2.46
Revenue Per Share
34.8 K
Quarterly Revenue Growth
(0.12)
Return On Assets
0.0881
The market value of Ecopetrol SA ADR is measured differently than its book value, which is the value of Ecopetrol that is recorded on the company's balance sheet. Investors also form their own opinion of Ecopetrol's value that differs from its market value or its book value, called intrinsic value, which is Ecopetrol's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Ecopetrol's market value can be influenced by many factors that don't directly affect Ecopetrol's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Ecopetrol's value and its price as these two are different measures arrived at by different means. Investors typically determine if Ecopetrol is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Ecopetrol's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.