Correlation Between Cosan SA and Crossamerica Partners

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

Diversification Opportunities for Cosan SA and Crossamerica Partners

-0.9

Correlation Coefficient

Cosan SA  Crossamerica Partners

Pay attention - limited upside

The 3 months correlation between Cosan and Crossamerica is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cosan SA ADR and Crossamerica Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crossamerica Partners 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 Crossamerica Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crossamerica Partners has no effect on the direction of Cosan SA i.e., Cosan SA and Crossamerica Partners go up and down completely randomly.

Pair Corralation between Cosan SA and Crossamerica Partners

Given the investment horizon of 90 days Cosan SA ADR is expected to under-perform the Crossamerica Partners. In addition to that, Cosan SA is 3.3 times more volatile than Crossamerica Partners LP. It trades about -0.13 of its total potential returns per unit of risk. Crossamerica Partners LP is currently generating about 0.22 per unit of volatility. If you would invest  1,959  in Crossamerica Partners LP on November 19, 2024 and sell it today you would earn a total of  306.00  from holding Crossamerica Partners LP or generate 15.62% return on investment over 90 days.

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

Cosan SA ADR  vs.  Crossamerica Partners LP

Cosan SA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cosan SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Crossamerica Partners

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Crossamerica Partners LP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Crossamerica Partners disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cosan SA and Crossamerica Partners

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

The idea behind Cosan SA ADR and Crossamerica Partners LP 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.