Correlation Between Sasol and PHILIP

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

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

Diversification Opportunities for Sasol and PHILIP

0.09

Correlation Coefficient

Sasol  PHILIP

Significant diversification

The 3 months correlation between Sasol and PHILIP is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sasol and PHILIP MORRIS INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHILIP MORRIS INTERN 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 PHILIP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHILIP MORRIS INTERN has no effect on the direction of Sasol i.e., Sasol and PHILIP go up and down completely randomly.

Pair Corralation between Sasol and PHILIP

Considering the 90-day investment horizon Sasol is expected to generate 3.38 times more return on investment than PHILIP. However, Sasol is 3.38 times more volatile than PHILIP MORRIS INTERNATIONAL. It trades about 0.12 of its potential returns per unit of risk. PHILIP MORRIS INTERNATIONAL is currently generating about 0.03 per unit of risk. If you would invest  453.00  in Sasol on May 21, 2025 and sell it today you would earn a total of  125.00  from holding Sasol or generate 27.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Sasol  vs.  PHILIP MORRIS INTERNATIONAL

Sasol

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Sasol are ranked lower than 9 (%) 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.

PHILIP MORRIS INTERN

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PHILIP MORRIS INTERNATIONAL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PHILIP is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sasol and PHILIP

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

The idea behind Sasol and PHILIP MORRIS INTERNATIONAL 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 Commodity Directory module to find actively traded commodities issued by global exchanges.