Correlation Between Sasol and Perimeter Solutions

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

By analyzing existing cross correlation between Sasol and Perimeter Solutions SA, you can compare the effects of market volatilities on Sasol and Perimeter Solutions 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 Perimeter Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sasol and Perimeter Solutions.

Diversification Opportunities for Sasol and Perimeter Solutions

-0.4

Correlation Coefficient

Sasol  Perimeter Solutions

Very good diversification

The 3 months correlation between Sasol and Perimeter is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sasol and Perimeter Solutions SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perimeter Solutions 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 Perimeter Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perimeter Solutions has no effect on the direction of Sasol i.e., Sasol and Perimeter Solutions go up and down completely randomly.

Pair Corralation between Sasol and Perimeter Solutions

Considering the 90-day investment horizon Sasol is expected to under-perform the Perimeter Solutions. In addition to that, Sasol is 1.16 times more volatile than Perimeter Solutions SA. It trades about -0.14 of its total potential returns per unit of risk. Perimeter Solutions SA is currently generating about 0.09 per unit of volatility. If you would invest  1,139  in Perimeter Solutions SA on September 4, 2024 and sell it today you would earn a total of  150.00  from holding Perimeter Solutions SA or generate 13.17% return on investment over 90 days.

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

Sasol  vs.  Perimeter Solutions SA

Sasol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sasol has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Perimeter Solutions

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perimeter Solutions SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Perimeter Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sasol and Perimeter Solutions

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

The idea behind Sasol and Perimeter Solutions SA 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.