Correlation Between Select Energy and Sasol
Can any of the company-specific risk be diversified away by investing in both Select Energy and Sasol 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 Select Energy and Sasol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Energy Services and Sasol, you can compare the effects of market volatilities on Select Energy and Sasol 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 Select Energy with a short position of Sasol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Energy and Sasol.
Diversification Opportunities for Select Energy and Sasol
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Select and Sasol is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Select Energy Services and Sasol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasol and Select Energy 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 Select Energy Services are associated (or correlated) with Sasol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sasol has no effect on the direction of Select Energy i.e., Select Energy and Sasol go up and down completely randomly.
Pair Corralation between Select Energy and Sasol
Given the investment horizon of 90 days Select Energy Services is expected to generate 1.9 times more return on investment than Sasol. However, Select Energy is 1.9 times more volatile than Sasol. It trades about 0.28 of its potential returns per unit of risk. Sasol is currently generating about -0.13 per unit of risk. If you would invest 1,072 in Select Energy Services on August 27, 2024 and sell it today you would earn a total of 397.00 from holding Select Energy Services or generate 37.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Energy Services vs. Sasol
Performance |
| Timeline |
| Select Energy Services |
| Sasol |
Select Energy and Sasol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Energy and Sasol
The main advantage of trading using opposite Select Energy and Sasol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Energy position performs unexpectedly, Sasol 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 Sasol will offset losses from the drop in Sasol's long position.| Select Energy vs. ProPetro Holding Corp | Select Energy vs. RPC Inc | Select Energy vs. MRC Global | Select Energy vs. Expro Group Holdings |
| Sasol vs. Olin Corporation | Sasol vs. Cabot | Sasol vs. Kronos Worldwide | Sasol vs. LyondellBasell Industries NV |
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 CEOs Directory module to screen CEOs from public companies around the world.
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