Correlation Between Cosan and Black Hills
Can any of the company-specific risk be diversified away by investing in both Cosan and Black Hills 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 and Black Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosan Limited and Black Hills, you can compare the effects of market volatilities on Cosan and Black Hills 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 with a short position of Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosan and Black Hills.
Diversification Opportunities for Cosan and Black Hills
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cosan and Black is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cosan Limited and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and Cosan 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 Limited are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Cosan i.e., Cosan and Black Hills go up and down completely randomly.
Pair Corralation between Cosan and Black Hills
If you would invest (100.00) in Cosan Limited on January 19, 2024 and sell it today you would earn a total of 100.00 from holding Cosan Limited or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Cosan Limited vs. Black Hills
Performance |
| Timeline |
| Cosan Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Black Hills |
Cosan and Black Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosan and Black Hills
The main advantage of trading using opposite Cosan and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosan position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.The idea behind Cosan Limited and Black Hills 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.| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
Check out your portfolio center.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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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