Correlation Between Sasol and Eni SpA

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

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

Diversification Opportunities for Sasol and Eni SpA

0.51

Correlation Coefficient

Sasol  Eni SpA

Very weak diversification

The 3 months correlation between Sasol and Eni is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sasol and Eni SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eni SpA 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 Eni SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eni SpA has no effect on the direction of Sasol i.e., Sasol and Eni SpA go up and down completely randomly.

Pair Corralation between Sasol and Eni SpA

Considering the 90-day investment horizon Sasol is expected to generate 1.39 times more return on investment than Eni SpA. However, Sasol is 1.39 times more volatile than Eni SpA. It trades about 0.16 of its potential returns per unit of risk. Eni SpA is currently generating about 0.14 per unit of risk. If you would invest  410.00  in Sasol on May 19, 2025 and sell it today you would earn a total of  164.00  from holding Sasol or generate 40.0% return on investment over 90 days.

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

Sasol  vs.  Eni SpA

Sasol

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sasol are ranked lower than 12 (%) 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.

Eni SpA

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Eni SpA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Eni SpA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sasol and Eni SpA

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

The idea behind Sasol and Eni SpA 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.