Correlation Between Adams Resources and Cosan SA
Can any of the company-specific risk be diversified away by investing in both Adams Resources and Cosan SA 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 Adams Resources and Cosan SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adams Resources Energy and Cosan SA ADR, you can compare the effects of market volatilities on Adams Resources and Cosan SA 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 Adams Resources with a short position of Cosan SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Resources and Cosan SA.
Diversification Opportunities for Adams Resources and Cosan SA
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Adams and Cosan is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Adams Resources Energy and Cosan SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosan SA ADR and Adams Resources 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 Adams Resources Energy are associated (or correlated) with Cosan SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosan SA ADR has no effect on the direction of Adams Resources i.e., Adams Resources and Cosan SA go up and down completely randomly.
Pair Corralation between Adams Resources and Cosan SA
Allowing for the 90-day total investment horizon Adams Resources Energy is expected to generate 2.92 times more return on investment than Cosan SA. However, Adams Resources is 2.92 times more volatile than Cosan SA ADR. It trades about 0.23 of its potential returns per unit of risk. Cosan SA ADR is currently generating about -0.15 per unit of risk. If you would invest 2,695 in Adams Resources Energy on August 28, 2024 and sell it today you would earn a total of 1,045 from holding Adams Resources Energy or generate 38.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Resources Energy vs. Cosan SA ADR
Performance |
| Timeline |
| Adams Resources Energy |
| Cosan SA ADR |
Adams Resources and Cosan SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Resources and Cosan SA
The main advantage of trading using opposite Adams Resources and Cosan SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Resources position performs unexpectedly, Cosan SA 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 Cosan SA will offset losses from the drop in Cosan SA's long position.| Adams Resources vs. Delek Energy | Adams Resources vs. Crossamerica Partners LP | Adams Resources vs. Valvoline | Adams Resources vs. Star Gas Partners |
| Cosan SA vs. Delek Energy | Cosan SA vs. Crossamerica Partners LP | Cosan SA vs. Par Pacific Holdings | Cosan SA vs. Valvoline |
Check out your portfolio center.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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