Correlation Between Sasol and Core Molding
Can any of the company-specific risk be diversified away by investing in both Sasol and Core Molding at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sasol and Core Molding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sasol and Core Molding Technologies, you can compare the effects of market volatilities on Sasol and Core Molding 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 Core Molding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sasol and Core Molding.
Diversification Opportunities for Sasol and Core Molding
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sasol and Core is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sasol and Core Molding Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Molding Technologies 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 are associated (or correlated) with Core Molding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Molding Technologies has no effect on the direction of Sasol i.e., Sasol and Core Molding go up and down completely randomly.
Pair Corralation between Sasol and Core Molding
Considering the 90-day investment horizon Sasol is expected to under-perform the Core Molding. In addition to that, Sasol is 1.08 times more volatile than Core Molding Technologies. It trades about -0.08 of its total potential returns per unit of risk. Core Molding Technologies is currently generating about 0.01 per unit of volatility. If you would invest 1,801 in Core Molding Technologies on August 27, 2024 and sell it today you would lose (51.00) from holding Core Molding Technologies or give up 2.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sasol vs. Core Molding Technologies
Performance |
| Timeline |
| Sasol |
| Core Molding Technologies |
Sasol and Core Molding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sasol and Core Molding
The main advantage of trading using opposite Sasol and Core Molding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sasol position performs unexpectedly, Core Molding 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 Core Molding will offset losses from the drop in Core Molding's long position.The idea behind Sasol and Core Molding Technologies 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.| Core Molding vs. Quaker Chemical | Core Molding vs. Minerals Technologies | Core Molding vs. Innospec | Core Molding vs. H B Fuller |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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