Correlation Between Jubilee Platinum and Sasol

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

By analyzing existing cross correlation between Jubilee Platinum and Sasol Ltd Bee, you can compare the effects of market volatilities on Jubilee Platinum 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 Jubilee Platinum with a short position of Sasol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jubilee Platinum and Sasol.

Diversification Opportunities for Jubilee Platinum and Sasol

0.54

Correlation Coefficient

Jubilee Platinum  Sasol

Very weak diversification

The 3 months correlation between Jubilee and Sasol is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Jubilee Platinum and Sasol Ltd Bee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasol Ltd Bee and Jubilee Platinum 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 Jubilee Platinum 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 Ltd Bee has no effect on the direction of Jubilee Platinum i.e., Jubilee Platinum and Sasol go up and down completely randomly.

Pair Corralation between Jubilee Platinum and Sasol

Assuming the 90 days trading horizon Jubilee Platinum is expected to generate 7.14 times less return on investment than Sasol. But when comparing it to its historical volatility, Jubilee Platinum is 2.46 times less risky than Sasol. It trades about 0.0 of its potential returns per unit of risk. Sasol Ltd Bee is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,020,000  in Sasol Ltd Bee on October 20, 2024 and sell it today you would lose (310,000) from holding Sasol Ltd Bee or give up 30.39% of portfolio value over 90 days.

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

Jubilee Platinum  vs.  Sasol Ltd Bee

Jubilee Platinum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jubilee Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Jubilee Platinum is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jubilee Platinum and Sasol

The main advantage of trading using opposite Jubilee Platinum and Sasol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jubilee Platinum 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.

The idea behind Jubilee Platinum and Sasol Ltd Bee 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.