Correlation Between Cosan SA and Neste Oyj
Can any of the company-specific risk be diversified away by investing in both Cosan SA and Neste Oyj 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 Cosan SA and Neste Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosan SA ADR and Neste Oyj, you can compare the effects of market volatilities on Cosan SA and Neste Oyj 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 Cosan SA with a short position of Neste Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosan SA and Neste Oyj.
Diversification Opportunities for Cosan SA and Neste Oyj
Poor diversification
The 3 months correlation between Cosan and Neste is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cosan SA ADR and Neste Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neste Oyj and Cosan SA 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 Cosan SA ADR are associated (or correlated) with Neste Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neste Oyj has no effect on the direction of Cosan SA i.e., Cosan SA and Neste Oyj go up and down completely randomly.
Pair Corralation between Cosan SA and Neste Oyj
Given the investment horizon of 90 days Cosan SA ADR is expected to under-perform the Neste Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Cosan SA ADR is 1.04 times less risky than Neste Oyj. The stock trades about -0.2 of its potential returns per unit of risk. The Neste Oyj is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 1,617 in Neste Oyj on August 31, 2024 and sell it today you would lose (133.00) from holding Neste Oyj or give up 8.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cosan SA ADR vs. Neste Oyj
Performance |
| Timeline |
| Cosan SA ADR |
| Neste Oyj |
Cosan SA and Neste Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosan SA and Neste Oyj
The main advantage of trading using opposite Cosan SA and Neste Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosan SA position performs unexpectedly, Neste Oyj 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 Neste Oyj will offset losses from the drop in Neste Oyj's long position.| Cosan SA vs. Delek Energy | Cosan SA vs. Crossamerica Partners LP | Cosan SA vs. Par Pacific Holdings | Cosan SA vs. Valvoline |
| Neste Oyj vs. Cosan SA ADR | Neste Oyj vs. Ultrapar Participacoes SA | Neste Oyj vs. Delek Logistics Partners | Neste Oyj vs. Sunoco LP |
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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