Correlation Between Empire Petroleum and Cosan SA

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

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

Diversification Opportunities for Empire Petroleum and Cosan SA

0.07

Correlation Coefficient

Empire Petroleum  Cosan SA

Significant diversification

The 3 months correlation between Empire and Cosan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Empire Petroleum Corp 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 Empire Petroleum 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 Empire Petroleum Corp 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 Empire Petroleum i.e., Empire Petroleum and Cosan SA go up and down completely randomly.

Pair Corralation between Empire Petroleum and Cosan SA

Allowing for the 90-day total investment horizon Empire Petroleum Corp is expected to under-perform the Cosan SA. In addition to that, Empire Petroleum is 1.12 times more volatile than Cosan SA ADR. It trades about -0.07 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  538.00  in Cosan SA ADR on December 27, 2024 and sell it today you would earn a total of  1.00  from holding Cosan SA ADR or generate 0.19% return on investment over 90 days.

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

Empire Petroleum Corp  vs.  Cosan SA ADR

Empire Petroleum Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Empire Petroleum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail 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 Empire Petroleum and Cosan SA

The main advantage of trading using opposite Empire Petroleum and Cosan SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Petroleum 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 Empire Petroleum Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.