Correlation Between Coronation Industrial and Sasol

Can any of the company-specific risk be diversified away by investing in both Coronation Industrial 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 Coronation Industrial and Sasol into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coronation Industrial and Sasol Ltd Bee, you can compare the effects of market volatilities on Coronation Industrial 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 Coronation Industrial with a short position of Sasol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coronation Industrial and Sasol.

Diversification Opportunities for Coronation Industrial and Sasol

-0.13

Correlation Coefficient

Coronation Industrial  Sasol

Good diversification

The 3 months correlation between Coronation and Sasol is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Coronation Industrial and Sasol Ltd Bee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasol Ltd Bee and Coronation Industrial 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 Coronation Industrial 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 Ltd Bee has no effect on the direction of Coronation Industrial i.e., Coronation Industrial and Sasol go up and down completely randomly.

Pair Corralation between Coronation Industrial and Sasol

Assuming the 90 days trading horizon Coronation Industrial is expected to generate 0.33 times more return on investment than Sasol. However, Coronation Industrial is 3.08 times less risky than Sasol. It trades about 0.11 of its potential returns per unit of risk. Sasol Ltd Bee is currently generating about -0.1 per unit of risk. If you would invest  26,347  in Coronation Industrial on September 5, 2024 and sell it today you would earn a total of  3,098  from holding Coronation Industrial or generate 11.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Coronation Industrial  vs.  Sasol Ltd Bee

Coronation Industrial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Industrial are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly inconsistent basic indicators, Coronation Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sasol Ltd Bee

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sasol Ltd Bee has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Etf's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with Coronation Industrial and Sasol

The main advantage of trading using opposite Coronation Industrial and Sasol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coronation Industrial 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.

The idea behind Coronation Industrial and Sasol Ltd Bee 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.