Correlation Between Lesaka Technologies and Thungela Resources
Can any of the company-specific risk be diversified away by investing in both Lesaka Technologies and Thungela Resources 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 Thungela Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lesaka Technologies and Thungela Resources Limited, you can compare the effects of market volatilities on Lesaka Technologies and Thungela Resources 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 Thungela Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lesaka Technologies and Thungela Resources.
Diversification Opportunities for Lesaka Technologies and Thungela Resources
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lesaka and Thungela is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lesaka Technologies and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources 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 Thungela Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thungela Resources has no effect on the direction of Lesaka Technologies i.e., Lesaka Technologies and Thungela Resources go up and down completely randomly.
Pair Corralation between Lesaka Technologies and Thungela Resources
Assuming the 90 days trading horizon Lesaka Technologies is expected to generate 1.61 times more return on investment than Thungela Resources. However, Lesaka Technologies is 1.61 times more volatile than Thungela Resources Limited. It trades about 0.04 of its potential returns per unit of risk. Thungela Resources Limited is currently generating about 0.02 per unit of risk. If you would invest 718,400 in Lesaka Technologies on August 31, 2024 and sell it today you would earn a total of 241,500 from holding Lesaka Technologies or generate 33.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lesaka Technologies vs. Thungela Resources Limited
Performance |
| Timeline |
| Lesaka Technologies |
| Thungela Resources |
Lesaka Technologies and Thungela Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lesaka Technologies and Thungela Resources
The main advantage of trading using opposite Lesaka Technologies and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lesaka Technologies position performs unexpectedly, Thungela Resources 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 Thungela Resources will offset losses from the drop in Thungela Resources' long position.| Lesaka Technologies vs. Standard Bank Group | Lesaka Technologies vs. Safari Investments RSA | Lesaka Technologies vs. Trematon Capital Investments | Lesaka Technologies vs. Kumba Iron Ore |
| Thungela Resources vs. Lesaka Technologies | Thungela Resources vs. Standard Bank Group | Thungela Resources vs. Datatec | Thungela Resources vs. HomeChoice Investments |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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