Correlation Between Sasol and African Rainbow
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By analyzing existing cross correlation between Sasol Ltd Bee and African Rainbow Minerals, you can compare the effects of market volatilities on Sasol and African Rainbow 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 African Rainbow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sasol and African Rainbow.
Diversification Opportunities for Sasol and African Rainbow
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sasol and African is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sasol Ltd Bee and African Rainbow Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Rainbow Minerals 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 African Rainbow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Rainbow Minerals has no effect on the direction of Sasol i.e., Sasol and African Rainbow go up and down completely randomly.
Pair Corralation between Sasol and African Rainbow
Assuming the 90 days trading horizon Sasol Ltd Bee is expected to under-perform the African Rainbow. But the etf apears to be less risky and, when comparing its historical volatility, Sasol Ltd Bee is 1.31 times less risky than African Rainbow. The etf trades about -0.25 of its potential returns per unit of risk. The African Rainbow Minerals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,620,000 in African Rainbow Minerals on September 14, 2024 and sell it today you would earn a total of 1,900 from holding African Rainbow Minerals or generate 0.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sasol Ltd Bee vs. African Rainbow Minerals
Performance |
| Timeline |
| Sasol Ltd Bee |
| African Rainbow Minerals |
Sasol and African Rainbow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sasol and African Rainbow
The main advantage of trading using opposite Sasol and African Rainbow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sasol position performs unexpectedly, African Rainbow 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 African Rainbow will offset losses from the drop in African Rainbow's long position.The idea behind Sasol Ltd Bee and African Rainbow Minerals 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.| African Rainbow vs. RCL Foods | African Rainbow vs. Harmony Gold Mining | African Rainbow vs. Datatec | African Rainbow vs. Brimstone 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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