Correlation Between Cosan SA and NetEase
Can any of the company-specific risk be diversified away by investing in both Cosan SA and NetEase 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 NetEase 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 NetEase, you can compare the effects of market volatilities on Cosan SA and NetEase 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 NetEase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosan SA and NetEase.
Diversification Opportunities for Cosan SA and NetEase
Significant diversification
The 3 months correlation between Cosan and NetEase is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cosan SA ADR and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase 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 NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of Cosan SA i.e., Cosan SA and NetEase go up and down completely randomly.
Pair Corralation between Cosan SA and NetEase
Given the investment horizon of 90 days Cosan SA ADR is expected to under-perform the NetEase. In addition to that, Cosan SA is 1.39 times more volatile than NetEase. It trades about -0.03 of its total potential returns per unit of risk. NetEase is currently generating about 0.22 per unit of volatility. If you would invest 9,910 in NetEase on April 20, 2025 and sell it today you would earn a total of 3,409 from holding NetEase or generate 34.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cosan SA ADR vs. NetEase
Performance |
| Timeline |
| Cosan SA ADR |
| NetEase |
Cosan SA and NetEase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosan SA and NetEase
The main advantage of trading using opposite Cosan SA and NetEase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosan SA position performs unexpectedly, NetEase 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 NetEase will offset losses from the drop in NetEase's long position.| Cosan SA vs. Delek Energy | Cosan SA vs. Crossamerica Partners LP | Cosan SA vs. Par Pacific Holdings | Cosan SA vs. Valvoline |
| NetEase vs. Bilibili | NetEase vs. Electronic Arts | NetEase vs. Take Two Interactive Software | NetEase vs. SohuCom |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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