Correlation Between Sibanye Stillwater and Renergen

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

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

Diversification Opportunities for Sibanye Stillwater and Renergen

-0.41

Correlation Coefficient

Sibanye Stillwater  Renergen

Very good diversification

The 3 months correlation between Sibanye and Renergen is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sibanye Stillwater and Renergen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renergen and Sibanye Stillwater 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 Sibanye Stillwater are associated (or correlated) with Renergen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renergen has no effect on the direction of Sibanye Stillwater i.e., Sibanye Stillwater and Renergen go up and down completely randomly.

Pair Corralation between Sibanye Stillwater and Renergen

Assuming the 90 days trading horizon Sibanye Stillwater is expected to generate 1.67 times more return on investment than Renergen. However, Sibanye Stillwater is 1.67 times more volatile than Renergen. It trades about 0.06 of its potential returns per unit of risk. Renergen is currently generating about -0.2 per unit of risk. If you would invest  159,800  in Sibanye Stillwater on September 3, 2024 and sell it today you would earn a total of  19,000  from holding Sibanye Stillwater or generate 11.89% return on investment over 90 days.

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

Sibanye Stillwater  vs.  Renergen

Sibanye Stillwater

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sibanye Stillwater are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sibanye Stillwater exhibited solid returns over the last few months and may actually be approaching a breakup point.

Renergen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renergen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Sibanye Stillwater and Renergen

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

The idea behind Sibanye Stillwater and Renergen 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..