Correlation Between City Lodge and Lesaka Technologies
Can any of the company-specific risk be diversified away by investing in both City Lodge 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 City Lodge and Lesaka Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Lodge Hotels and Lesaka Technologies, you can compare the effects of market volatilities on City Lodge 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 City Lodge with a short position of Lesaka Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Lodge and Lesaka Technologies.
Diversification Opportunities for City Lodge and Lesaka Technologies
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between City and Lesaka is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding City Lodge Hotels and Lesaka Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesaka Technologies and City Lodge 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 City Lodge Hotels 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 City Lodge i.e., City Lodge and Lesaka Technologies go up and down completely randomly.
Pair Corralation between City Lodge and Lesaka Technologies
Assuming the 90 days trading horizon City Lodge Hotels is expected to under-perform the Lesaka Technologies. But the stock apears to be less risky and, when comparing its historical volatility, City Lodge Hotels is 1.94 times less risky than Lesaka Technologies. The stock trades about -0.12 of its potential returns per unit of risk. The Lesaka Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 810,100 in Lesaka Technologies on October 24, 2024 and sell it today you would earn a total of 104,900 from holding Lesaka Technologies or generate 12.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Lodge Hotels vs. Lesaka Technologies
Performance |
| Timeline |
| City Lodge Hotels |
| Lesaka Technologies |
City Lodge and Lesaka Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Lodge and Lesaka Technologies
The main advantage of trading using opposite City Lodge and Lesaka Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Lodge 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.| City Lodge vs. Frontier Transport Holdings | City Lodge vs. Brimstone Investment | City Lodge vs. Safari Investments RSA | City Lodge vs. African Media Entertainment |
| Lesaka Technologies vs. City Lodge Hotels | Lesaka Technologies vs. Frontier Transport Holdings | Lesaka Technologies vs. Kumba Iron Ore | Lesaka Technologies vs. CA Sales Holdings |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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