Correlation Between Gevo and Sasol

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

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

Diversification Opportunities for Gevo and Sasol

0.74

Correlation Coefficient

Gevo  Sasol

Poor diversification

The 3 months correlation between Gevo and Sasol is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Gevo Inc and Sasol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasol and Gevo 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 Gevo Inc 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 has no effect on the direction of Gevo i.e., Gevo and Sasol go up and down completely randomly.

Pair Corralation between Gevo and Sasol

Given the investment horizon of 90 days Gevo is expected to generate 1.66 times less return on investment than Sasol. In addition to that, Gevo is 1.23 times more volatile than Sasol. It trades about 0.08 of its total potential returns per unit of risk. Sasol is currently generating about 0.17 per unit of volatility. If you would invest  348.00  in Sasol on May 5, 2025 and sell it today you would earn a total of  143.00  from holding Sasol or generate 41.09% return on investment over 90 days.

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

Gevo Inc  vs.  Sasol

Gevo Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gevo Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Gevo displayed solid returns over the last few months and may actually be approaching a breakup point.

Sasol

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sasol are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Sasol disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gevo and Sasol

The main advantage of trading using opposite Gevo and Sasol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gevo 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 Gevo Inc and Sasol 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.