Correlation Between Lesaka Technologies and MTN
Can any of the company-specific risk be diversified away by investing in both Lesaka Technologies and MTN 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 MTN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lesaka Technologies and MTN Group, you can compare the effects of market volatilities on Lesaka Technologies and MTN 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 MTN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lesaka Technologies and MTN.
Diversification Opportunities for Lesaka Technologies and MTN
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lesaka and MTN is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lesaka Technologies and MTN Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTN Group 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 MTN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTN Group has no effect on the direction of Lesaka Technologies i.e., Lesaka Technologies and MTN go up and down completely randomly.
Pair Corralation between Lesaka Technologies and MTN
Assuming the 90 days trading horizon Lesaka Technologies is expected to generate 1.74 times more return on investment than MTN. However, Lesaka Technologies is 1.74 times more volatile than MTN Group. It trades about 0.02 of its potential returns per unit of risk. MTN Group is currently generating about 0.01 per unit of risk. If you would invest 904,400 in Lesaka Technologies on September 3, 2024 and sell it today you would earn a total of 20,900 from holding Lesaka Technologies or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lesaka Technologies vs. MTN Group
Performance |
| Timeline |
| Lesaka Technologies |
| MTN Group |
Lesaka Technologies and MTN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lesaka Technologies and MTN
The main advantage of trading using opposite Lesaka Technologies and MTN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lesaka Technologies position performs unexpectedly, MTN 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 MTN will offset losses from the drop in MTN's long position.| Lesaka Technologies vs. Bytes Technology | Lesaka Technologies vs. Sasol Ltd Bee | Lesaka Technologies vs. Centaur Bci Balanced | Lesaka Technologies vs. Growthpoint Properties |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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