Correlation Between Sasol and Omnia Holdings

Can any of the company-specific risk be diversified away by investing in both Sasol and Omnia Holdings 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 Omnia Holdings 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 Omnia Holdings Limited, you can compare the effects of market volatilities on Sasol and Omnia Holdings 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 Omnia Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sasol and Omnia Holdings.

Diversification Opportunities for Sasol and Omnia Holdings

-0.68

Correlation Coefficient

Sasol  Omnia Holdings

Excellent diversification

The 3 months correlation between Sasol and Omnia is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sasol Ltd Bee and Omnia Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnia 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 Omnia Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omnia Holdings has no effect on the direction of Sasol i.e., Sasol and Omnia Holdings go up and down completely randomly.

Pair Corralation between Sasol and Omnia Holdings

Assuming the 90 days trading horizon Sasol is expected to generate 1.17 times less return on investment than Omnia Holdings. In addition to that, Sasol is 5.69 times more volatile than Omnia Holdings Limited. It trades about 0.01 of its total potential returns per unit of risk. Omnia Holdings Limited is currently generating about 0.06 per unit of volatility. If you would invest  653,100  in Omnia Holdings Limited on October 24, 2024 and sell it today you would earn a total of  36,700  from holding Omnia Holdings Limited or generate 5.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Sasol Ltd Bee  vs.  Omnia Holdings Limited

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.

Omnia Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Omnia Holdings Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Omnia Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sasol and Omnia Holdings

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

The idea behind Sasol Ltd Bee and Omnia Holdings Limited 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.