Correlation Between Ecovyst and Sasol
Can any of the company-specific risk be diversified away by investing in both Ecovyst 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 Ecovyst and Sasol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecovyst and Sasol, you can compare the effects of market volatilities on Ecovyst 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 Ecovyst with a short position of Sasol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecovyst and Sasol.
Diversification Opportunities for Ecovyst and Sasol
Poor diversification
The 3 months correlation between Ecovyst and Sasol is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ecovyst and Sasol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasol and Ecovyst 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 Ecovyst 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 Ecovyst i.e., Ecovyst and Sasol go up and down completely randomly.
Pair Corralation between Ecovyst and Sasol
Given the investment horizon of 90 days Ecovyst is expected to generate 1.34 times less return on investment than Sasol. But when comparing it to its historical volatility, Ecovyst is 1.36 times less risky than Sasol. It trades about 0.13 of its potential returns per unit of risk. Sasol is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 407.00 in Sasol on March 23, 2025 and sell it today you would earn a total of 133.00 from holding Sasol or generate 32.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecovyst vs. Sasol
Performance |
| Timeline |
| Ecovyst |
| Sasol |
Ecovyst and Sasol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecovyst and Sasol
The main advantage of trading using opposite Ecovyst and Sasol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecovyst 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.| Ecovyst vs. Orion Engineered Carbons | Ecovyst vs. Cabot | Ecovyst vs. Minerals Technologies | Ecovyst vs. Quaker Chemical |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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