Correlation Between Sasol and NewWave Silver

Can any of the company-specific risk be diversified away by investing in both Sasol and NewWave Silver 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 NewWave Silver 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 NewWave Silver Exchange, you can compare the effects of market volatilities on Sasol and NewWave Silver 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 NewWave Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sasol and NewWave Silver.

Diversification Opportunities for Sasol and NewWave Silver

0.48

Correlation Coefficient

Sasol  NewWave Silver

Very weak diversification

The 3 months correlation between Sasol and NewWave is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sasol Ltd Bee and NewWave Silver Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewWave Silver Exchange 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 NewWave Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewWave Silver Exchange has no effect on the direction of Sasol i.e., Sasol and NewWave Silver go up and down completely randomly.

Pair Corralation between Sasol and NewWave Silver

If you would invest  37,800  in NewWave Silver Exchange on October 26, 2024 and sell it today you would earn a total of  15,900  from holding NewWave Silver Exchange or generate 42.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.2%
Values	Daily Returns

Sasol Ltd Bee  vs.  NewWave Silver Exchange

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 somewhat strong fundamental drivers, Sasol is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NewWave Silver Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NewWave Silver Exchange has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NewWave Silver 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 NewWave Silver

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

The idea behind Sasol Ltd Bee and NewWave Silver Exchange 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.