Correlation Between Ecopetrol and Probe Metals

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

Diversification Opportunities for Ecopetrol and Probe Metals

0.69

Correlation Coefficient

Ecopetrol  Probe Metals

Poor diversification

The 3 months correlation between Ecopetrol and Probe is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Probe Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Probe Metals 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 Probe Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Probe Metals has no effect on the direction of Ecopetrol i.e., Ecopetrol and Probe Metals go up and down completely randomly.

Pair Corralation between Ecopetrol and Probe Metals

Allowing for the 90-day total investment horizon Ecopetrol is expected to generate 4.47 times less return on investment than Probe Metals. But when comparing it to its historical volatility, Ecopetrol SA ADR is 3.06 times less risky than Probe Metals. It trades about 0.06 of its potential returns per unit of risk. Probe Metals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  217.00  in Probe Metals on September 27, 2025 and sell it today you would earn a total of  50.00  from holding Probe Metals or generate 23.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ecopetrol SA ADR  vs.  Probe Metals

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 conflicting fundamental indicators, Ecopetrol may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Probe Metals

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Probe Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Probe Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecopetrol and Probe Metals

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

The idea behind Ecopetrol SA ADR and Probe Metals 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.