Correlation Between LyondellBasell Industries and Sasol
Can any of the company-specific risk be diversified away by investing in both LyondellBasell Industries 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 LyondellBasell Industries and Sasol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LyondellBasell Industries NV and Sasol, you can compare the effects of market volatilities on LyondellBasell Industries 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 LyondellBasell Industries with a short position of Sasol. Check out your portfolio center. Please also check ongoing floating volatility patterns of LyondellBasell Industries and Sasol.
Diversification Opportunities for LyondellBasell Industries and Sasol
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LyondellBasell and Sasol is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding LyondellBasell Industries NV and Sasol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasol and LyondellBasell Industries 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 LyondellBasell Industries NV 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 LyondellBasell Industries i.e., LyondellBasell Industries and Sasol go up and down completely randomly.
Pair Corralation between LyondellBasell Industries and Sasol
Considering the 90-day investment horizon LyondellBasell Industries NV is expected to generate 0.36 times more return on investment than Sasol. However, LyondellBasell Industries NV is 2.77 times less risky than Sasol. It trades about -0.18 of its potential returns per unit of risk. Sasol is currently generating about -0.13 per unit of risk. If you would invest 8,772 in LyondellBasell Industries NV on August 27, 2024 and sell it today you would lose (366.00) from holding LyondellBasell Industries NV or give up 4.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LyondellBasell Industries NV vs. Sasol
Performance |
| Timeline |
| LyondellBasell Industries |
| Sasol |
LyondellBasell Industries and Sasol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LyondellBasell Industries and Sasol
The main advantage of trading using opposite LyondellBasell Industries and Sasol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LyondellBasell Industries 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.| LyondellBasell Industries vs. International Flavors Fragrances | LyondellBasell Industries vs. Cabot | LyondellBasell Industries vs. Westlake Chemical | LyondellBasell Industries vs. Air Products and |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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