Correlation Between Sasol and Europa Metals
Can any of the company-specific risk be diversified away by investing in both Sasol and Europa Metals 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 Europa Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sasol and Europa Metals, you can compare the effects of market volatilities on Sasol and Europa Metals 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 Europa Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sasol and Europa Metals.
Diversification Opportunities for Sasol and Europa Metals
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sasol and Europa is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sasol and Europa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europa Metals 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 are associated (or correlated) with Europa Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europa Metals has no effect on the direction of Sasol i.e., Sasol and Europa Metals go up and down completely randomly.
Pair Corralation between Sasol and Europa Metals
Assuming the 90 days trading horizon Sasol is expected to generate 0.14 times more return on investment than Europa Metals. However, Sasol is 6.96 times less risky than Europa Metals. It trades about -0.12 of its potential returns per unit of risk. Europa Metals is currently generating about -0.05 per unit of risk. If you would invest 1,003,600 in Sasol on August 29, 2024 and sell it today you would lose (74,100) from holding Sasol or give up 7.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sasol vs. Europa Metals
Performance |
| Timeline |
| Sasol |
| Europa Metals |
Sasol and Europa Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sasol and Europa Metals
The main advantage of trading using opposite Sasol and Europa Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sasol position performs unexpectedly, Europa Metals 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 Europa Metals will offset losses from the drop in Europa Metals' long position.| Sasol vs. Standard Bank Group | Sasol vs. ABSA Bank Limited | Sasol vs. Trematon Capital Investments | Sasol vs. Copper 360 |
| Europa Metals vs. Brimstone Investment | Europa Metals vs. Safari Investments RSA | Europa Metals vs. eMedia Holdings Limited | Europa Metals vs. Master Drilling Group |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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