Correlation Between Ecopetrol and Moolec Science

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

Diversification Opportunities for Ecopetrol and Moolec Science

-0.41

Correlation Coefficient

Ecopetrol  Moolec Science

Very good diversification

The 3 months correlation between Ecopetrol and Moolec is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Moolec Science SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moolec Science SA 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 Moolec Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moolec Science SA has no effect on the direction of Ecopetrol i.e., Ecopetrol and Moolec Science go up and down completely randomly.

Pair Corralation between Ecopetrol and Moolec Science

Allowing for the 90-day total investment horizon Ecopetrol is expected to generate 23.01 times less return on investment than Moolec Science. But when comparing it to its historical volatility, Ecopetrol SA ADR is 10.4 times less risky than Moolec Science. It trades about 0.05 of its potential returns per unit of risk. Moolec Science SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.41  in Moolec Science SA on May 8, 2025 and sell it today you would earn a total of  0.48  from holding Moolec Science SA or generate 34.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	83.87%
Values	Daily Returns

Ecopetrol SA ADR  vs.  Moolec Science SA

Ecopetrol SA ADR

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Ecopetrol SA ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Ecopetrol is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Moolec Science SA

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Moolec Science SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Moolec Science showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecopetrol and Moolec Science

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

The idea behind Ecopetrol SA ADR and Moolec Science SA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..