Correlation Between Old Mutual and Lesaka Technologies
Can any of the company-specific risk be diversified away by investing in both Old Mutual and Lesaka Technologies 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 Old Mutual and Lesaka Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Mutual and Lesaka Technologies, you can compare the effects of market volatilities on Old Mutual and Lesaka Technologies 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 Old Mutual with a short position of Lesaka Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Mutual and Lesaka Technologies.
Diversification Opportunities for Old Mutual and Lesaka Technologies
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Old and Lesaka is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Old Mutual and Lesaka Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesaka Technologies and Old Mutual 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 Old Mutual are associated (or correlated) with Lesaka Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lesaka Technologies has no effect on the direction of Old Mutual i.e., Old Mutual and Lesaka Technologies go up and down completely randomly.
Pair Corralation between Old Mutual and Lesaka Technologies
Assuming the 90 days trading horizon Old Mutual is expected to generate 1.1 times less return on investment than Lesaka Technologies. But when comparing it to its historical volatility, Old Mutual is 3.0 times less risky than Lesaka Technologies. It trades about 0.16 of its potential returns per unit of risk. Lesaka Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 882,500 in Lesaka Technologies on September 12, 2024 and sell it today you would earn a total of 23,900 from holding Lesaka Technologies or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Mutual vs. Lesaka Technologies
Performance |
| Timeline |
| Old Mutual |
| Lesaka Technologies |
Old Mutual and Lesaka Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Mutual and Lesaka Technologies
The main advantage of trading using opposite Old Mutual and Lesaka Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Mutual position performs unexpectedly, Lesaka Technologies 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 Lesaka Technologies will offset losses from the drop in Lesaka Technologies' long position.| Old Mutual vs. E Media Holdings | Old Mutual vs. Harmony Gold Mining | Old Mutual vs. Astral Foods | Old Mutual vs. Deneb Investments |
| Lesaka Technologies vs. Bytes Technology | Lesaka Technologies vs. ISA Holdings | Lesaka Technologies vs. Sasol Ltd Bee | Lesaka Technologies vs. Centaur Bci Balanced |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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