Correlation Between Sasol and Netcare
Can any of the company-specific risk be diversified away by investing in both Sasol and Netcare 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 Netcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sasol and Netcare, you can compare the effects of market volatilities on Sasol and Netcare 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 Netcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sasol and Netcare.
Diversification Opportunities for Sasol and Netcare
Excellent diversification
The 3 months correlation between Sasol and Netcare is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sasol and Netcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcare 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 Netcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcare has no effect on the direction of Sasol i.e., Sasol and Netcare go up and down completely randomly.
Pair Corralation between Sasol and Netcare
Assuming the 90 days trading horizon Sasol is expected to under-perform the Netcare. In addition to that, Sasol is 1.95 times more volatile than Netcare. It trades about -0.06 of its total potential returns per unit of risk. Netcare is currently generating about 0.14 per unit of volatility. If you would invest 115,000 in Netcare on September 1, 2024 and sell it today you would earn a total of 33,000 from holding Netcare or generate 28.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sasol vs. Netcare
Performance |
| Timeline |
| Sasol |
| Netcare |
Sasol and Netcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sasol and Netcare
The main advantage of trading using opposite Sasol and Netcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sasol position performs unexpectedly, Netcare 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 Netcare will offset losses from the drop in Netcare's long position.| Sasol vs. Capitec Bank Holdings | Sasol vs. Afine Investments | Sasol vs. Astoria Investments | Sasol vs. Datatec |
| Netcare vs. HomeChoice Investments | Netcare vs. We Buy Cars | Netcare vs. Ascendis Health | Netcare vs. Astral Foods |
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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