Correlation Between Lesaka Technologies and African Media
Can any of the company-specific risk be diversified away by investing in both Lesaka Technologies and African Media 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 African Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lesaka Technologies and African Media Entertainment, you can compare the effects of market volatilities on Lesaka Technologies and African Media 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 African Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lesaka Technologies and African Media.
Diversification Opportunities for Lesaka Technologies and African Media
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lesaka and African is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lesaka Technologies and African Media Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Media Entert 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 African Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Media Entert has no effect on the direction of Lesaka Technologies i.e., Lesaka Technologies and African Media go up and down completely randomly.
Pair Corralation between Lesaka Technologies and African Media
Assuming the 90 days trading horizon Lesaka Technologies is expected to generate 1.45 times more return on investment than African Media. However, Lesaka Technologies is 1.45 times more volatile than African Media Entertainment. It trades about 0.05 of its potential returns per unit of risk. African Media Entertainment is currently generating about -0.03 per unit of risk. If you would invest 903,100 in Lesaka Technologies on November 3, 2024 and sell it today you would earn a total of 16,900 from holding Lesaka Technologies or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lesaka Technologies vs. African Media Entertainment
Performance |
| Timeline |
| Lesaka Technologies |
| African Media Entert |
Lesaka Technologies and African Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lesaka Technologies and African Media
The main advantage of trading using opposite Lesaka Technologies and African Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lesaka Technologies position performs unexpectedly, African Media 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 African Media will offset losses from the drop in African Media's long position.| Lesaka Technologies vs. Harmony Gold Mining | Lesaka Technologies vs. CA Sales Holdings | Lesaka Technologies vs. Frontier Transport Holdings | Lesaka Technologies vs. Kumba Iron Ore |
| African Media vs. Sasol Ltd Bee | African Media vs. Sabvest Capital | African Media vs. Growthpoint Properties | African Media vs. Coronation Global Equity |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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