Correlation Between Sasol and AfroCentric Investment
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By analyzing existing cross correlation between Sasol Ltd Bee and AfroCentric Investment Corp, you can compare the effects of market volatilities on Sasol and AfroCentric Investment 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 AfroCentric Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sasol and AfroCentric Investment.
Diversification Opportunities for Sasol and AfroCentric Investment
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sasol and AfroCentric is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sasol Ltd Bee and AfroCentric Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfroCentric Investment 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 Ltd Bee are associated (or correlated) with AfroCentric Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfroCentric Investment has no effect on the direction of Sasol i.e., Sasol and AfroCentric Investment go up and down completely randomly.
Pair Corralation between Sasol and AfroCentric Investment
Assuming the 90 days trading horizon Sasol Ltd Bee is expected to generate 0.21 times more return on investment than AfroCentric Investment. However, Sasol Ltd Bee is 4.68 times less risky than AfroCentric Investment. It trades about -0.25 of its potential returns per unit of risk. AfroCentric Investment Corp is currently generating about -0.21 per unit of risk. If you would invest 860,000 in Sasol Ltd Bee on September 13, 2024 and sell it today you would lose (60,000) from holding Sasol Ltd Bee or give up 6.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sasol Ltd Bee vs. AfroCentric Investment Corp
Performance |
| Timeline |
| Sasol Ltd Bee |
| AfroCentric Investment |
Sasol and AfroCentric Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sasol and AfroCentric Investment
The main advantage of trading using opposite Sasol and AfroCentric Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sasol position performs unexpectedly, AfroCentric Investment 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 AfroCentric Investment will offset losses from the drop in AfroCentric Investment's long position.The idea behind Sasol Ltd Bee and AfroCentric Investment Corp 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.| AfroCentric Investment vs. Life Healthcare | AfroCentric Investment vs. Sasol Ltd Bee | AfroCentric Investment vs. Centaur Bci Balanced | AfroCentric Investment vs. Growthpoint Properties |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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