Correlation Between Cosan SA and World Kinect

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

Diversification Opportunities for Cosan SA and World Kinect

-0.42

Correlation Coefficient

Cosan SA  World Kinect

Very good diversification

The 3 months correlation between Cosan and World is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cosan SA ADR and World Kinect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Kinect 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 World Kinect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Kinect has no effect on the direction of Cosan SA i.e., Cosan SA and World Kinect go up and down completely randomly.

Pair Corralation between Cosan SA and World Kinect

Given the investment horizon of 90 days Cosan SA ADR is expected to under-perform the World Kinect. In addition to that, Cosan SA is 2.67 times more volatile than World Kinect. It trades about -0.14 of its total potential returns per unit of risk. World Kinect is currently generating about 0.11 per unit of volatility. If you would invest  2,563  in World Kinect on May 2, 2025 and sell it today you would earn a total of  204.00  from holding World Kinect or generate 7.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Cosan SA ADR  vs.  World Kinect

Cosan SA ADR

Risk-Adjusted Performance

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

World Kinect

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in World Kinect are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, World Kinect may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Cosan SA and World Kinect

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

The idea behind Cosan SA ADR and World Kinect 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.