Correlation Between Sasol and Allied Electronics
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By analyzing existing cross correlation between Sasol Ltd Bee and Allied Electronics, you can compare the effects of market volatilities on Sasol and Allied Electronics 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 Allied Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sasol and Allied Electronics.
Diversification Opportunities for Sasol and Allied Electronics
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sasol and Allied is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sasol Ltd Bee and Allied Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Electronics 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 Allied Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Electronics has no effect on the direction of Sasol i.e., Sasol and Allied Electronics go up and down completely randomly.
Pair Corralation between Sasol and Allied Electronics
Assuming the 90 days trading horizon Sasol Ltd Bee is expected to under-perform the Allied Electronics. In addition to that, Sasol is 2.83 times more volatile than Allied Electronics. It trades about -0.31 of its total potential returns per unit of risk. Allied Electronics is currently generating about 0.16 per unit of volatility. If you would invest 202,500 in Allied Electronics on September 12, 2024 and sell it today you would earn a total of 7,500 from holding Allied Electronics or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sasol Ltd Bee vs. Allied Electronics
Performance |
| Timeline |
| Sasol Ltd Bee |
| Allied Electronics |
Sasol and Allied Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sasol and Allied Electronics
The main advantage of trading using opposite Sasol and Allied Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sasol position performs unexpectedly, Allied Electronics 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 Allied Electronics will offset losses from the drop in Allied Electronics' long position.The idea behind Sasol Ltd Bee and Allied Electronics 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.| Allied Electronics vs. Copper 360 | Allied Electronics vs. RCL Foods | Allied Electronics vs. Deneb Investments | Allied Electronics vs. Hosken Consolidated 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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