Correlation Between Lesaka Technologies and RCL Foods
Can any of the company-specific risk be diversified away by investing in both Lesaka Technologies and RCL Foods 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 RCL Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lesaka Technologies and RCL Foods, you can compare the effects of market volatilities on Lesaka Technologies and RCL Foods 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 RCL Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lesaka Technologies and RCL Foods.
Diversification Opportunities for Lesaka Technologies and RCL Foods
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lesaka and RCL is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lesaka Technologies and RCL Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCL Foods 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 RCL Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCL Foods has no effect on the direction of Lesaka Technologies i.e., Lesaka Technologies and RCL Foods go up and down completely randomly.
Pair Corralation between Lesaka Technologies and RCL Foods
Assuming the 90 days trading horizon Lesaka Technologies is expected to generate 2.63 times more return on investment than RCL Foods. However, Lesaka Technologies is 2.63 times more volatile than RCL Foods. It trades about 0.05 of its potential returns per unit of risk. RCL Foods is currently generating about -0.1 per unit of risk. If you would invest 880,000 in Lesaka Technologies on August 24, 2024 and sell it today you would earn a total of 20,100 from holding Lesaka Technologies or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lesaka Technologies vs. RCL Foods
Performance |
| Timeline |
| Lesaka Technologies |
| RCL Foods |
Lesaka Technologies and RCL Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lesaka Technologies and RCL Foods
The main advantage of trading using opposite Lesaka Technologies and RCL Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lesaka Technologies position performs unexpectedly, RCL Foods 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 RCL Foods will offset losses from the drop in RCL Foods' long position.| Lesaka Technologies vs. Bytes Technology | Lesaka Technologies vs. Centaur Bci Balanced | Lesaka Technologies vs. Growthpoint Properties | Lesaka Technologies vs. Bowler Metcalf |
| RCL Foods vs. Frontier Transport Holdings | RCL Foods vs. Kap Industrial Holdings | RCL Foods vs. Hosken Consolidated Investments | RCL Foods vs. Astral Foods |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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