Correlation Between Sasol and Life Healthcare
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By analyzing existing cross correlation between Sasol Ltd Bee and Life Healthcare, you can compare the effects of market volatilities on Sasol and Life Healthcare 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 Life Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sasol and Life Healthcare.
Diversification Opportunities for Sasol and Life Healthcare
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sasol and Life is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sasol Ltd Bee and Life Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Healthcare 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 Life Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Healthcare has no effect on the direction of Sasol i.e., Sasol and Life Healthcare go up and down completely randomly.
Pair Corralation between Sasol and Life Healthcare
Assuming the 90 days trading horizon Sasol Ltd Bee is expected to under-perform the Life Healthcare. In addition to that, Sasol is 4.48 times more volatile than Life Healthcare. It trades about 0.0 of its total potential returns per unit of risk. Life Healthcare is currently generating about 0.1 per unit of volatility. If you would invest 130,100 in Life Healthcare on November 3, 2024 and sell it today you would earn a total of 27,400 from holding Life Healthcare or generate 21.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sasol Ltd Bee vs. Life Healthcare
Performance |
| Timeline |
| Sasol Ltd Bee |
| Life Healthcare |
Sasol and Life Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sasol and Life Healthcare
The main advantage of trading using opposite Sasol and Life Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sasol position performs unexpectedly, Life Healthcare 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 Life Healthcare will offset losses from the drop in Life Healthcare's long position.The idea behind Sasol Ltd Bee and Life Healthcare 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.| Life Healthcare vs. Boxer Retail | Life Healthcare vs. Capitec Bank Holdings | Life Healthcare vs. Frontier Transport Holdings | Life Healthcare vs. Mantengu Mining |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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