Correlation Between Crossamerica Partners and Cosan SA

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

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

Diversification Opportunities for Crossamerica Partners and Cosan SA

0.18

Correlation Coefficient

Crossamerica Partners  Cosan SA

Average diversification

The 3 months correlation between Crossamerica and Cosan is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Crossamerica Partners LP 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 Crossamerica Partners 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 Crossamerica Partners LP 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 Crossamerica Partners i.e., Crossamerica Partners and Cosan SA go up and down completely randomly.

Pair Corralation between Crossamerica Partners and Cosan SA

Given the investment horizon of 90 days Crossamerica Partners LP is expected to under-perform the Cosan SA. But the stock apears to be less risky and, when comparing its historical volatility, Crossamerica Partners LP is 1.69 times less risky than Cosan SA. The stock trades about -0.03 of its potential returns per unit of risk. The Cosan SA ADR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  504.00  in Cosan SA ADR on March 7, 2025 and sell it today you would earn a total of  83.00  from holding Cosan SA ADR or generate 16.47% return on investment over 90 days.

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

Crossamerica Partners LP  vs.  Cosan SA ADR

Crossamerica Partners

Risk-Adjusted Performance

Good

Over the last 90 days Crossamerica Partners LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Crossamerica Partners is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Cosan SA ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cosan SA ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Cosan SA displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crossamerica Partners and Cosan SA

The main advantage of trading using opposite Crossamerica Partners and Cosan SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crossamerica Partners 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 Crossamerica Partners LP 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.