Correlation Between Lesaka Technologies and AECI

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Can any of the company-specific risk be diversified away by investing in both Lesaka Technologies and AECI 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 AECI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lesaka Technologies and AECI, you can compare the effects of market volatilities on Lesaka Technologies and AECI 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 AECI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lesaka Technologies and AECI.

Diversification Opportunities for Lesaka Technologies and AECI

-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Lesaka and AECI is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lesaka Technologies and AECI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECI 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 AECI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECI has no effect on the direction of Lesaka Technologies i.e., Lesaka Technologies and AECI go up and down completely randomly.

Pair Corralation between Lesaka Technologies and AECI

Assuming the 90 days trading horizon Lesaka Technologies is expected to generate 2.83 times more return on investment than AECI. However, Lesaka Technologies is 2.83 times more volatile than AECI. It trades about 0.04 of its potential returns per unit of risk. AECI is currently generating about 0.02 per unit of risk. If you would invest  673,500  in Lesaka Technologies on September 8, 2024 and sell it today you would earn a total of  228,500  from holding Lesaka Technologies or generate 33.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Lesaka Technologies  vs.  AECI

 Performance 
       Timeline  
Lesaka Technologies 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Lesaka Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Lesaka Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.
AECI 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AECI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Lesaka Technologies and AECI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lesaka Technologies and AECI

The main advantage of trading using opposite Lesaka Technologies and AECI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lesaka Technologies position performs unexpectedly, AECI 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 AECI will offset losses from the drop in AECI's long position.
The idea behind Lesaka Technologies and AECI 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.
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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