Correlation Between Torm PLC and Cosan SA
Can any of the company-specific risk be diversified away by investing in both Torm PLC 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 Torm PLC and Cosan SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Torm PLC Class and Cosan SA ADR, you can compare the effects of market volatilities on Torm PLC 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 Torm PLC with a short position of Cosan SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Torm PLC and Cosan SA.
Diversification Opportunities for Torm PLC and Cosan SA
Poor diversification
The 3 months correlation between Torm and Cosan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Torm PLC Class 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 Torm PLC 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 Torm PLC Class 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 Torm PLC i.e., Torm PLC and Cosan SA go up and down completely randomly.
Pair Corralation between Torm PLC and Cosan SA
Given the investment horizon of 90 days Torm PLC Class is expected to generate 0.8 times more return on investment than Cosan SA. However, Torm PLC Class is 1.25 times less risky than Cosan SA. It trades about 0.02 of its potential returns per unit of risk. Cosan SA ADR is currently generating about -0.06 per unit of risk. If you would invest 2,115 in Torm PLC Class on August 25, 2025 and sell it today you would earn a total of 133.00 from holding Torm PLC Class or generate 6.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Torm PLC Class vs. Cosan SA ADR
Performance |
| Timeline |
| Torm PLC Class |
| Cosan SA ADR |
Torm PLC and Cosan SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Torm PLC and Cosan SA
The main advantage of trading using opposite Torm PLC and Cosan SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Torm PLC 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.| Torm PLC vs. Teekay Tankers | Torm PLC vs. DHT Holdings | Torm PLC vs. Northern Oil Gas | Torm PLC vs. Delek Logistics Partners |
| Cosan SA vs. Delek Energy | Cosan SA vs. Par Pacific Holdings | Cosan SA vs. Torm PLC Class | Cosan SA vs. Northern Oil Gas |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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