Correlation Between Allied Electronics and Lesaka Technologies
Can any of the company-specific risk be diversified away by investing in both Allied Electronics and Lesaka Technologies 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 Allied Electronics and Lesaka Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Electronics and Lesaka Technologies, you can compare the effects of market volatilities on Allied Electronics and Lesaka Technologies 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 Allied Electronics with a short position of Lesaka Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Electronics and Lesaka Technologies.
Diversification Opportunities for Allied Electronics and Lesaka Technologies
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Allied and Lesaka is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Allied Electronics and Lesaka Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesaka Technologies and Allied Electronics 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 Allied Electronics are associated (or correlated) with Lesaka Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lesaka Technologies has no effect on the direction of Allied Electronics i.e., Allied Electronics and Lesaka Technologies go up and down completely randomly.
Pair Corralation between Allied Electronics and Lesaka Technologies
Assuming the 90 days trading horizon Allied Electronics is expected to generate 0.62 times more return on investment than Lesaka Technologies. However, Allied Electronics is 1.6 times less risky than Lesaka Technologies. It trades about 0.12 of its potential returns per unit of risk. Lesaka Technologies is currently generating about 0.05 per unit of risk. If you would invest 100,497 in Allied Electronics on August 24, 2024 and sell it today you would earn a total of 96,503 from holding Allied Electronics or generate 96.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Allied Electronics vs. Lesaka Technologies
Performance |
| Timeline |
| Allied Electronics |
| Lesaka Technologies |
Allied Electronics and Lesaka Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Electronics and Lesaka Technologies
The main advantage of trading using opposite Allied Electronics and Lesaka Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Electronics position performs unexpectedly, Lesaka Technologies 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 Lesaka Technologies will offset losses from the drop in Lesaka Technologies' long position.| Allied Electronics vs. Ayo Technology Solutions | Allied Electronics vs. Centaur Bci Balanced | Allied Electronics vs. Growthpoint Properties | Allied Electronics vs. Bowler Metcalf |
| Lesaka Technologies vs. Bytes Technology | Lesaka Technologies vs. Centaur Bci Balanced | Lesaka Technologies vs. Growthpoint Properties | Lesaka Technologies vs. Bowler Metcalf |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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