Correlation Between Cosan SA and CROWN

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

Diversification Opportunities for Cosan SA and CROWN

-0.03

Correlation Coefficient

Cosan SA  CROWN

Good diversification

The 3 months correlation between Cosan and CROWN is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cosan SA ADR and CROWN CASTLE INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CROWN CASTLE INTL 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 CROWN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CROWN CASTLE INTL has no effect on the direction of Cosan SA i.e., Cosan SA and CROWN go up and down completely randomly.

Pair Corralation between Cosan SA and CROWN

Given the investment horizon of 90 days Cosan SA ADR is expected to under-perform the CROWN. In addition to that, Cosan SA is 5.43 times more volatile than CROWN CASTLE INTL. It trades about -0.37 of its total potential returns per unit of risk. CROWN CASTLE INTL is currently generating about -0.14 per unit of volatility. If you would invest  9,671  in CROWN CASTLE INTL on October 7, 2024 and sell it today you would lose (297.00) from holding CROWN CASTLE INTL or give up 3.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.12%
Values	Daily Returns

Cosan SA ADR  vs.  CROWN CASTLE INTL

Cosan SA ADR

Risk-Adjusted Performance

0 of 100

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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CROWN CASTLE INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CROWN CASTLE INTL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cosan SA and CROWN

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

The idea behind Cosan SA ADR and CROWN CASTLE INTL 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.