Correlation Between Sasol and Repsol SA

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

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

Diversification Opportunities for Sasol and Repsol SA

0.87

Correlation Coefficient

Sasol  Repsol SA

Very poor diversification

The 3 months correlation between Sasol and Repsol is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sasol and Repsol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol SA 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 Repsol SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol SA has no effect on the direction of Sasol i.e., Sasol and Repsol SA go up and down completely randomly.

Pair Corralation between Sasol and Repsol SA

Considering the 90-day investment horizon Sasol is expected to generate 1.23 times more return on investment than Repsol SA. However, Sasol is 1.23 times more volatile than Repsol SA. It trades about 0.19 of its potential returns per unit of risk. Repsol SA is currently generating about 0.17 per unit of risk. If you would invest  348.00  in Sasol on May 3, 2025 and sell it today you would earn a total of  164.00  from holding Sasol or generate 47.13% return on investment over 90 days.

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

Sasol  vs.  Repsol SA

Sasol

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sasol are ranked lower than 15 (%) 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.

Repsol SA

Risk-Adjusted Performance

Good

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

Pair Trading with Sasol and Repsol SA

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

The idea behind Sasol and Repsol 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.