Correlation Between Cosan SA and Thai Oil
Can any of the company-specific risk be diversified away by investing in both Cosan SA and Thai Oil 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 Thai Oil 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 Thai Oil PCL, you can compare the effects of market volatilities on Cosan SA and Thai Oil 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 Thai Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosan SA and Thai Oil.
Diversification Opportunities for Cosan SA and Thai Oil
Very weak diversification
The 3 months correlation between Cosan and Thai is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cosan SA ADR and Thai Oil PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Oil PCL 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 Thai Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Oil PCL has no effect on the direction of Cosan SA i.e., Cosan SA and Thai Oil go up and down completely randomly.
Pair Corralation between Cosan SA and Thai Oil
Given the investment horizon of 90 days Cosan SA ADR is expected to under-perform the Thai Oil. But the stock apears to be less risky and, when comparing its historical volatility, Cosan SA ADR is 2.74 times less risky than Thai Oil. The stock trades about -0.2 of its potential returns per unit of risk. The Thai Oil PCL is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,500 in Thai Oil PCL on August 31, 2024 and sell it today you would lose (130.00) from holding Thai Oil PCL or give up 8.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cosan SA ADR vs. Thai Oil PCL
Performance |
| Timeline |
| Cosan SA ADR |
| Thai Oil PCL |
Cosan SA and Thai Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosan SA and Thai Oil
The main advantage of trading using opposite Cosan SA and Thai Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosan SA position performs unexpectedly, Thai Oil 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 Thai Oil will offset losses from the drop in Thai Oil's long position.| Cosan SA vs. Delek Energy | Cosan SA vs. Crossamerica Partners LP | Cosan SA vs. Par Pacific Holdings | Cosan SA vs. Valvoline |
| Thai Oil vs. Neste Oyj | Thai Oil vs. Cosan SA ADR | Thai Oil vs. Ultrapar Participacoes SA | Thai Oil vs. Delek Logistics Partners |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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