Correlation Between Sasol and Capitec Bank
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By analyzing existing cross correlation between Sasol Ltd Bee and Capitec Bank Holdings, you can compare the effects of market volatilities on Sasol and Capitec Bank 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 Capitec Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sasol and Capitec Bank.
Diversification Opportunities for Sasol and Capitec Bank
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sasol and Capitec is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sasol Ltd Bee and Capitec Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitec Bank 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 Ltd Bee are associated (or correlated) with Capitec Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitec Bank Holdings has no effect on the direction of Sasol i.e., Sasol and Capitec Bank go up and down completely randomly.
Pair Corralation between Sasol and Capitec Bank
Assuming the 90 days trading horizon Sasol Ltd Bee is expected to under-perform the Capitec Bank. In addition to that, Sasol is 1.7 times more volatile than Capitec Bank Holdings. It trades about -0.1 of its total potential returns per unit of risk. Capitec Bank Holdings is currently generating about 0.19 per unit of volatility. If you would invest 22,106,000 in Capitec Bank Holdings on September 3, 2024 and sell it today you would earn a total of 10,505,800 from holding Capitec Bank Holdings or generate 47.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.32% |
| Values | Daily Returns |
Sasol Ltd Bee vs. Capitec Bank Holdings
Performance |
| Timeline |
| Sasol Ltd Bee |
| Capitec Bank Holdings |
Sasol and Capitec Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sasol and Capitec Bank
The main advantage of trading using opposite Sasol and Capitec Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sasol position performs unexpectedly, Capitec Bank 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 Capitec Bank will offset losses from the drop in Capitec Bank's long position.The idea behind Sasol Ltd Bee and Capitec Bank Holdings 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.| Capitec Bank vs. ABSA Bank Limited | Capitec Bank vs. Investec | Capitec Bank vs. Sasol Ltd Bee | Capitec Bank vs. Centaur Bci Balanced |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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