Correlation Between Sasol and Impala Platinum

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

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

Diversification Opportunities for Sasol and Impala Platinum

0.36

Correlation Coefficient

Sasol  Impala Platinum

Weak diversification

The 3 months correlation between Sasol and Impala is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sasol Ltd Bee and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings 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 Ltd Bee are associated (or correlated) with Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of Sasol i.e., Sasol and Impala Platinum go up and down completely randomly.

Pair Corralation between Sasol and Impala Platinum

Assuming the 90 days trading horizon Sasol Ltd Bee is expected to under-perform the Impala Platinum. But the etf apears to be less risky and, when comparing its historical volatility, Sasol Ltd Bee is 1.33 times less risky than Impala Platinum. The etf trades about -0.25 of its potential returns per unit of risk. The Impala Platinum Holdings is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  1,203,300  in Impala Platinum Holdings on September 24, 2024 and sell it today you would lose (270,600) from holding Impala Platinum Holdings or give up 22.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Sasol Ltd Bee  vs.  Impala Platinum Holdings

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 weak performance in the last few months, the Etf's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Impala Platinum Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impala Platinum Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Sasol and Impala Platinum

The main advantage of trading using opposite Sasol and Impala Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sasol position performs unexpectedly, Impala Platinum 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 Impala Platinum will offset losses from the drop in Impala Platinum's long position.

The idea behind Sasol Ltd Bee and Impala Platinum Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.