Correlation Between Cosan SA and Delek Logistics

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

Diversification Opportunities for Cosan SA and Delek Logistics

0.17

Correlation Coefficient

Cosan SA  Delek Logistics

Average diversification

The 3 months correlation between Cosan and Delek is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cosan SA ADR and Delek Logistics Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Logistics 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 Delek Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Logistics Partners has no effect on the direction of Cosan SA i.e., Cosan SA and Delek Logistics go up and down completely randomly.

Pair Corralation between Cosan SA and Delek Logistics

Given the investment horizon of 90 days Cosan SA is expected to generate 1.98 times less return on investment than Delek Logistics. In addition to that, Cosan SA is 2.49 times more volatile than Delek Logistics Partners. It trades about 0.02 of its total potential returns per unit of risk. Delek Logistics Partners is currently generating about 0.11 per unit of volatility. If you would invest  4,002  in Delek Logistics Partners on December 28, 2024 and sell it today you would earn a total of  382.00  from holding Delek Logistics Partners or generate 9.55% return on investment over 90 days.

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

Cosan SA ADR  vs.  Delek Logistics Partners

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.

Delek Logistics Partners

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Logistics Partners are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent forward-looking signals, Delek Logistics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cosan SA and Delek Logistics

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

The idea behind Cosan SA ADR and Delek Logistics Partners 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.