Correlation Between Endocan Corp and Sasol

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

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

Diversification Opportunities for Endocan Corp and Sasol

0.34

Correlation Coefficient

Endocan Corp  Sasol

Weak diversification

The 3 months correlation between Endocan and Sasol is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Endocan Corp and Sasol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasol and Endocan Corp 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 Endocan Corp 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 Endocan Corp i.e., Endocan Corp and Sasol go up and down completely randomly.

Pair Corralation between Endocan Corp and Sasol

Given the investment horizon of 90 days Endocan Corp is expected to generate 34.73 times more return on investment than Sasol. However, Endocan Corp is 34.73 times more volatile than Sasol. It trades about 0.12 of its potential returns per unit of risk. Sasol is currently generating about -0.02 per unit of risk. If you would invest  0.01  in Endocan Corp on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Endocan Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Endocan Corp  vs.  Sasol

Endocan Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Endocan Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Endocan Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Sasol

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sasol has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Sasol is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Endocan Corp and Sasol

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

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.