Correlation Between Sasol and Discovery Aggressive

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

By analyzing existing cross correlation between Sasol Ltd Bee and Discovery Aggressive Dynamic, you can compare the effects of market volatilities on Sasol and Discovery Aggressive 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 Discovery Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sasol and Discovery Aggressive.

Diversification Opportunities for Sasol and Discovery Aggressive

-0.19

Correlation Coefficient

Sasol  Discovery Aggressive

Good diversification

The 3 months correlation between Sasol and Discovery is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sasol Ltd Bee and Discovery Aggressive Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discovery Aggressive 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 Ltd Bee are associated (or correlated) with Discovery Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discovery Aggressive has no effect on the direction of Sasol i.e., Sasol and Discovery Aggressive go up and down completely randomly.

Pair Corralation between Sasol and Discovery Aggressive

Assuming the 90 days trading horizon Sasol Ltd Bee is expected to under-perform the Discovery Aggressive. In addition to that, Sasol is 12.45 times more volatile than Discovery Aggressive Dynamic. It trades about -0.18 of its total potential returns per unit of risk. Discovery Aggressive Dynamic is currently generating about 0.0 per unit of volatility. If you would invest  163.00  in Discovery Aggressive Dynamic on December 5, 2024 and sell it today you would earn a total of  0.00  from holding Discovery Aggressive Dynamic or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sasol Ltd Bee  vs.  Discovery Aggressive Dynamic

Sasol Ltd Bee

Risk-Adjusted Performance

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 somewhat unsteady fundamental drivers, Sasol may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Discovery Aggressive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Discovery Aggressive Dynamic has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong forward-looking signals, Discovery Aggressive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sasol and Discovery Aggressive

The main advantage of trading using opposite Sasol and Discovery Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sasol position performs unexpectedly, Discovery Aggressive 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 Discovery Aggressive will offset losses from the drop in Discovery Aggressive's long position.

The idea behind Sasol Ltd Bee and Discovery Aggressive Dynamic 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.