Correlation Between 5E Advanced and Sasol
Can any of the company-specific risk be diversified away by investing in both 5E Advanced 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 5E Advanced and Sasol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 5E Advanced Materials and Sasol, you can compare the effects of market volatilities on 5E Advanced 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 5E Advanced with a short position of Sasol. Check out your portfolio center. Please also check ongoing floating volatility patterns of 5E Advanced and Sasol.
Diversification Opportunities for 5E Advanced and Sasol
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FEAM and Sasol is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding 5E Advanced Materials and Sasol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasol and 5E Advanced 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 5E Advanced Materials 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 5E Advanced i.e., 5E Advanced and Sasol go up and down completely randomly.
Pair Corralation between 5E Advanced and Sasol
Given the investment horizon of 90 days 5E Advanced Materials is expected to under-perform the Sasol. In addition to that, 5E Advanced is 1.46 times more volatile than Sasol. It trades about -0.11 of its total potential returns per unit of risk. Sasol is currently generating about -0.13 per unit of volatility. If you would invest 576.00 in Sasol on August 27, 2024 and sell it today you would lose (51.00) from holding Sasol or give up 8.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
5E Advanced Materials vs. Sasol
Performance |
| Timeline |
| 5E Advanced Materials |
| Sasol |
5E Advanced and Sasol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 5E Advanced and Sasol
The main advantage of trading using opposite 5E Advanced and Sasol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 5E Advanced 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.| 5E Advanced vs. Innospec | 5E Advanced vs. Minerals Technologies | 5E Advanced vs. Oil Dri | 5E Advanced vs. Quaker Chemical |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |