Correlation Between Sasol and CA Sales
Can any of the company-specific risk be diversified away by investing in both Sasol and CA Sales 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 Sasol and CA Sales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sasol and CA Sales Holdings, you can compare the effects of market volatilities on Sasol and CA Sales 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 Sasol with a short position of CA Sales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sasol and CA Sales.
Diversification Opportunities for Sasol and CA Sales
Pay attention - limited upside
The 3 months correlation between Sasol and CAA is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sasol and CA Sales Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CA Sales Holdings and Sasol 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 Sasol are associated (or correlated) with CA Sales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CA Sales Holdings has no effect on the direction of Sasol i.e., Sasol and CA Sales go up and down completely randomly.
Pair Corralation between Sasol and CA Sales
Assuming the 90 days trading horizon Sasol is expected to under-perform the CA Sales. In addition to that, Sasol is 1.25 times more volatile than CA Sales Holdings. It trades about -0.11 of its total potential returns per unit of risk. CA Sales Holdings is currently generating about 0.04 per unit of volatility. If you would invest 155,000 in CA Sales Holdings on August 24, 2024 and sell it today you would earn a total of 2,000 from holding CA Sales Holdings or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sasol vs. CA Sales Holdings
Performance |
| Timeline |
| Sasol |
| CA Sales Holdings |
Sasol and CA Sales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sasol and CA Sales
The main advantage of trading using opposite Sasol and CA Sales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sasol position performs unexpectedly, CA Sales 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 CA Sales will offset losses from the drop in CA Sales' long position.| Sasol vs. CA Sales Holdings | Sasol vs. Blue Label Telecoms | Sasol vs. Astoria Investments | Sasol vs. Kumba Iron Ore |
| CA Sales vs. Hosken Consolidated Investments | CA Sales vs. Zeder Investments | CA Sales vs. Kumba Iron Ore | CA Sales vs. Astoria Investments |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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