Correlation Between Quaker Chemical and Sasol

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

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

Diversification Opportunities for Quaker Chemical and Sasol

0.78

Correlation Coefficient

Quaker Chemical  Sasol

Poor diversification

The 3 months correlation between Quaker and Sasol is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and Sasol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasol and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical i.e., Quaker Chemical and Sasol go up and down completely randomly.

Pair Corralation between Quaker Chemical and Sasol

Considering the 90-day investment horizon Quaker Chemical is expected to generate 2.0 times less return on investment than Sasol. But when comparing it to its historical volatility, Quaker Chemical is 1.34 times less risky than Sasol. It trades about 0.11 of its potential returns per unit of risk. Sasol is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  348.00  in Sasol on May 4, 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

Quaker Chemical  vs.  Sasol

Quaker Chemical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quaker Chemical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Quaker Chemical reported 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 Quaker Chemical and Sasol

The main advantage of trading using opposite Quaker Chemical and Sasol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical 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 Quaker Chemical 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.