Correlation Between GSETNC and Sasol
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By analyzing existing cross correlation between GSETNC and Sasol Ltd Bee, you can compare the effects of market volatilities on GSETNC 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 GSETNC with a short position of Sasol. Check out your portfolio center. Please also check ongoing floating volatility patterns of GSETNC and Sasol.
Diversification Opportunities for GSETNC and Sasol
Poor diversification
The 3 months correlation between GSETNC and Sasol is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding GSETNC and Sasol Ltd Bee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasol Ltd Bee and GSETNC 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 GSETNC 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 Ltd Bee has no effect on the direction of GSETNC i.e., GSETNC and Sasol go up and down completely randomly.
Pair Corralation between GSETNC and Sasol
Assuming the 90 days trading horizon GSETNC is expected to generate 0.18 times more return on investment than Sasol. However, GSETNC is 5.62 times less risky than Sasol. It trades about 0.22 of its potential returns per unit of risk. Sasol Ltd Bee is currently generating about 0.01 per unit of risk. If you would invest 341,000 in GSETNC on November 6, 2024 and sell it today you would earn a total of 61,300 from holding GSETNC or generate 17.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 66.67% |
| Values | Daily Returns |
GSETNC vs. Sasol Ltd Bee
Performance |
| Timeline |
| GSETNC |
| Sasol Ltd Bee |
GSETNC and Sasol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GSETNC and Sasol
The main advantage of trading using opposite GSETNC and Sasol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GSETNC 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.The idea behind GSETNC and Sasol Ltd Bee 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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