Correlation Between Lesaka Technologies and Advtech
Can any of the company-specific risk be diversified away by investing in both Lesaka Technologies and Advtech 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 Lesaka Technologies and Advtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lesaka Technologies and Advtech, you can compare the effects of market volatilities on Lesaka Technologies and Advtech 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 Lesaka Technologies with a short position of Advtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lesaka Technologies and Advtech.
Diversification Opportunities for Lesaka Technologies and Advtech
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lesaka and Advtech is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lesaka Technologies and Advtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advtech and Lesaka Technologies 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 Lesaka Technologies are associated (or correlated) with Advtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advtech has no effect on the direction of Lesaka Technologies i.e., Lesaka Technologies and Advtech go up and down completely randomly.
Pair Corralation between Lesaka Technologies and Advtech
Assuming the 90 days trading horizon Lesaka Technologies is expected to generate 1.16 times less return on investment than Advtech. In addition to that, Lesaka Technologies is 2.65 times more volatile than Advtech. It trades about 0.04 of its total potential returns per unit of risk. Advtech is currently generating about 0.12 per unit of volatility. If you would invest 177,200 in Advtech on September 1, 2024 and sell it today you would earn a total of 153,800 from holding Advtech or generate 86.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lesaka Technologies vs. Advtech
Performance |
| Timeline |
| Lesaka Technologies |
| Advtech |
Lesaka Technologies and Advtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lesaka Technologies and Advtech
The main advantage of trading using opposite Lesaka Technologies and Advtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lesaka Technologies position performs unexpectedly, Advtech 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 Advtech will offset losses from the drop in Advtech's long position.| Lesaka Technologies vs. Bytes Technology | Lesaka Technologies vs. Sasol Ltd Bee | Lesaka Technologies vs. Growthpoint Properties | Lesaka Technologies vs. AfricaRhodium ETF |
| Advtech vs. Brimstone Investment | Advtech vs. Zeder Investments | Advtech vs. Life Healthcare | Advtech 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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