Correlation Between Lesaka Technologies and AECI
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 Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lesaka Technologies vs. AECI
Performance |
| Timeline |
| Lesaka Technologies |
| AECI |
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.| Lesaka Technologies vs. Bytes Technology | Lesaka Technologies vs. ISA Holdings | Lesaka Technologies vs. Growthpoint Properties | Lesaka Technologies vs. CoreShares Preference Share |
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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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