Correlation Between Albemarle Corp and Sasol

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

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

Diversification Opportunities for Albemarle Corp and Sasol

0.64

Correlation Coefficient

Albemarle Corp  Sasol

Poor diversification

The 3 months correlation between Albemarle and Sasol is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Albemarle Corp and Sasol Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasol Limited and Albemarle Corp 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 Albemarle Corp 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 Limited has no effect on the direction of Albemarle Corp i.e., Albemarle Corp and Sasol go up and down completely randomly.

Pair Corralation between Albemarle Corp and Sasol

Considering the 90-day investment horizon Albemarle Corp is expected to generate 2.07 times less return on investment than Sasol. In addition to that, Albemarle Corp is 1.07 times more volatile than Sasol Limited. It trades about 0.09 of its total potential returns per unit of risk. Sasol Limited is currently generating about 0.2 per unit of volatility. If you would invest  333.00  in Sasol Limited on May 4, 2025 and sell it today you would earn a total of  161.00  from holding Sasol Limited or generate 48.35% return on investment over 90 days.

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

Albemarle Corp  vs.  Sasol Limited

Albemarle Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Albemarle Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Albemarle Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Sasol Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sasol Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Sasol reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Albemarle Corp and Sasol

The main advantage of trading using opposite Albemarle Corp and Sasol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albemarle Corp 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 Albemarle Corp and Sasol 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.