Correlation Between Brazil Potash and KS AG

Can any of the company-specific risk be diversified away by investing in both Brazil Potash and KS AG 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 Brazil Potash and KS AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brazil Potash Corp and KS AG DRC, you can compare the effects of market volatilities on Brazil Potash and KS AG 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 Brazil Potash with a short position of KS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brazil Potash and KS AG.

Diversification Opportunities for Brazil Potash and KS AG

-0.4

Correlation Coefficient

Brazil Potash  KS AG

Very good diversification

The 3 months correlation between Brazil and KPLUY is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Brazil Potash Corp and KS AG DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KS AG DRC and Brazil Potash 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 Brazil Potash Corp are associated (or correlated) with KS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KS AG DRC has no effect on the direction of Brazil Potash i.e., Brazil Potash and KS AG go up and down completely randomly.

Pair Corralation between Brazil Potash and KS AG

Considering the 90-day investment horizon Brazil Potash Corp is expected to generate 4.36 times more return on investment than KS AG. However, Brazil Potash is 4.36 times more volatile than KS AG DRC. It trades about -0.02 of its potential returns per unit of risk. KS AG DRC is currently generating about -0.08 per unit of risk. If you would invest  231.00  in Brazil Potash Corp on May 6, 2025 and sell it today you would lose (67.00) from holding Brazil Potash Corp or give up 29.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Brazil Potash Corp  vs.  KS AG DRC

Brazil Potash Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brazil Potash Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

KS AG DRC

Risk-Adjusted Performance

Very Weak

Over the last 90 days KS AG DRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Brazil Potash and KS AG

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

The idea behind Brazil Potash Corp and KS AG DRC 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.