Correlation Between Quantum Foods and Sasol

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

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

Diversification Opportunities for Quantum Foods and Sasol

0.29

Correlation Coefficient

Quantum Foods  Sasol

Modest diversification

The 3 months correlation between Quantum and Sasol is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Quantum Foods Holdings 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 Quantum Foods 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 Quantum Foods Holdings 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 Quantum Foods i.e., Quantum Foods and Sasol go up and down completely randomly.

Pair Corralation between Quantum Foods and Sasol

Assuming the 90 days trading horizon Quantum Foods Holdings is expected to under-perform the Sasol. But the stock apears to be less risky and, when comparing its historical volatility, Quantum Foods Holdings is 1.48 times less risky than Sasol. The stock trades about -0.01 of its potential returns per unit of risk. The Sasol Ltd Bee is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  350,000  in Sasol Ltd Bee on December 23, 2024 and sell it today you would earn a total of  175,100  from holding Sasol Ltd Bee or generate 50.03% return on investment over 90 days.

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

Quantum Foods Holdings  vs.  Sasol Ltd Bee

Quantum Foods Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quantum Foods Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Quantum Foods 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

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sasol Ltd Bee are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Sasol sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quantum Foods and Sasol

The main advantage of trading using opposite Quantum Foods and Sasol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quantum Foods 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 Quantum Foods Holdings 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 CEOs Directory module to screen CEOs from public companies around the world.