Correlation Between Cosan SA and BTG Pactual
Can any of the company-specific risk be diversified away by investing in both Cosan SA and BTG Pactual 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 BTG Pactual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosan SA and BTG Pactual Logstica, you can compare the effects of market volatilities on Cosan SA and BTG Pactual 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 BTG Pactual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosan SA and BTG Pactual.
Diversification Opportunities for Cosan SA and BTG Pactual
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cosan and BTG is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cosan SA and BTG Pactual Logstica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTG Pactual Logstica 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 are associated (or correlated) with BTG Pactual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTG Pactual Logstica has no effect on the direction of Cosan SA i.e., Cosan SA and BTG Pactual go up and down completely randomly.
Pair Corralation between Cosan SA and BTG Pactual
Assuming the 90 days trading horizon Cosan SA is expected to generate 4.5 times more return on investment than BTG Pactual. However, Cosan SA is 4.5 times more volatile than BTG Pactual Logstica. It trades about -0.03 of its potential returns per unit of risk. BTG Pactual Logstica is currently generating about -0.3 per unit of risk. If you would invest 1,344 in Cosan SA on June 30, 2024 and sell it today you would lose (29.00) from holding Cosan SA or give up 2.16% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.65% |
Values | Daily Returns |
Cosan SA vs. BTG Pactual Logstica
Performance |
Timeline |
Cosan SA |
BTG Pactual Logstica |
Cosan SA and BTG Pactual Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cosan SA and BTG Pactual
The main advantage of trading using opposite Cosan SA and BTG Pactual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosan SA position performs unexpectedly, BTG Pactual 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 BTG Pactual will offset losses from the drop in BTG Pactual's long position.Cosan SA vs. Braskem SA | Cosan SA vs. Cyrela Brazil Realty | Cosan SA vs. CCR SA | Cosan SA vs. Lojas Renner SA |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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