Correlation Between Sasol and Starco Brands
Can any of the company-specific risk be diversified away by investing in both Sasol and Starco Brands 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 Starco Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sasol and Starco Brands, you can compare the effects of market volatilities on Sasol and Starco Brands 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 Starco Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sasol and Starco Brands.
Diversification Opportunities for Sasol and Starco Brands
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sasol and Starco is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sasol and Starco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starco Brands 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 Starco Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starco Brands has no effect on the direction of Sasol i.e., Sasol and Starco Brands go up and down completely randomly.
Pair Corralation between Sasol and Starco Brands
Considering the 90-day investment horizon Sasol is expected to generate 0.23 times more return on investment than Starco Brands. However, Sasol is 4.3 times less risky than Starco Brands. It trades about -0.13 of its potential returns per unit of risk. Starco Brands is currently generating about -0.06 per unit of risk. If you would invest 576.00 in Sasol on August 27, 2024 and sell it today you would lose (51.00) from holding Sasol or give up 8.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sasol vs. Starco Brands
Performance |
| Timeline |
| Sasol |
| Starco Brands |
Sasol and Starco Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sasol and Starco Brands
The main advantage of trading using opposite Sasol and Starco Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sasol position performs unexpectedly, Starco Brands 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 Starco Brands will offset losses from the drop in Starco Brands' long position.| Sasol vs. Olin Corporation | Sasol vs. Cabot | Sasol vs. Kronos Worldwide | Sasol vs. LyondellBasell Industries NV |
| Starco Brands vs. FitLife Brands, Common | Starco Brands vs. HUMANA INC | Starco Brands vs. SCOR PK | Starco Brands vs. Aquagold International |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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