Correlation Between Core Molding and Sasol
Can any of the company-specific risk be diversified away by investing in both Core Molding and Sasol 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 Core Molding and Sasol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Molding Technologies and Sasol, you can compare the effects of market volatilities on Core Molding and Sasol 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 Core Molding with a short position of Sasol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Molding and Sasol.
Diversification Opportunities for Core Molding and Sasol
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Core and Sasol is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Core Molding Technologies and Sasol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasol and Core Molding 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 Core Molding Technologies are associated (or correlated) with Sasol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sasol has no effect on the direction of Core Molding i.e., Core Molding and Sasol go up and down completely randomly.
Pair Corralation between Core Molding and Sasol
Considering the 90-day investment horizon Core Molding Technologies is expected to generate 0.97 times more return on investment than Sasol. However, Core Molding Technologies is 1.03 times less risky than Sasol. It trades about -0.03 of its potential returns per unit of risk. Sasol is currently generating about -0.09 per unit of risk. If you would invest 2,748 in Core Molding Technologies on January 10, 2025 and sell it today you would lose (1,270) from holding Core Molding Technologies or give up 46.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Molding Technologies vs. Sasol
Performance |
| Timeline |
| Core Molding Technologies |
| Sasol |
Core Molding and Sasol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Molding and Sasol
The main advantage of trading using opposite Core Molding and Sasol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Molding position performs unexpectedly, Sasol 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 Sasol will offset losses from the drop in Sasol's long position.| Core Molding vs. Innospec | Core Molding vs. H B Fuller | Core Molding vs. Quaker Chemical | Core Molding vs. Minerals Technologies |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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