Correlation Between Aemetis and Cosan SA

Can any of the company-specific risk be diversified away by investing in both Aemetis 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 Aemetis and Cosan SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aemetis and Cosan SA ADR, you can compare the effects of market volatilities on Aemetis 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 Aemetis with a short position of Cosan SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aemetis and Cosan SA.

Diversification Opportunities for Aemetis and Cosan SA

0.65

Correlation Coefficient

Aemetis  Cosan SA

Poor diversification

The 3 months correlation between Aemetis and Cosan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Aemetis 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 Aemetis 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 Aemetis 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 Aemetis i.e., Aemetis and Cosan SA go up and down completely randomly.

Pair Corralation between Aemetis and Cosan SA

Given the investment horizon of 90 days Aemetis is expected to under-perform the Cosan SA. In addition to that, Aemetis is 1.55 times more volatile than Cosan SA ADR. It trades about -0.1 of its total potential returns per unit of risk. Cosan SA ADR is currently generating about 0.02 per unit of volatility. If you would invest  537.00  in Cosan SA ADR on December 29, 2024 and sell it today you would earn a total of  7.00  from holding Cosan SA ADR or generate 1.3% return on investment over 90 days.

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

Aemetis  vs.  Cosan SA ADR

Aemetis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aemetis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Cosan SA ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cosan SA ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Cosan SA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aemetis and Cosan SA

The main advantage of trading using opposite Aemetis and Cosan SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aemetis 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.

The idea behind Aemetis and Cosan SA ADR 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.