Correlation Between Brimstone Investment and Lesaka Technologies

Can any of the company-specific risk be diversified away by investing in both Brimstone Investment 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 Brimstone Investment and Lesaka Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brimstone Investment and Lesaka Technologies, you can compare the effects of market volatilities on Brimstone Investment 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 Brimstone Investment with a short position of Lesaka Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brimstone Investment and Lesaka Technologies.

Diversification Opportunities for Brimstone Investment and Lesaka Technologies

0.87

Correlation Coefficient

Brimstone Investment  Lesaka Technologies

Very poor diversification

The 3 months correlation between Brimstone and Lesaka is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Brimstone Investment and Lesaka Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesaka Technologies and Brimstone Investment 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 Brimstone Investment 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 Brimstone Investment i.e., Brimstone Investment and Lesaka Technologies go up and down completely randomly.

Pair Corralation between Brimstone Investment and Lesaka Technologies

Assuming the 90 days trading horizon Brimstone Investment is expected to under-perform the Lesaka Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Brimstone Investment is 1.12 times less risky than Lesaka Technologies. The stock trades about -0.17 of its potential returns per unit of risk. The Lesaka Technologies is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  903,100  in Lesaka Technologies on December 23, 2024 and sell it today you would lose (93,100) from holding Lesaka Technologies or give up 10.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Brimstone Investment  vs.  Lesaka Technologies

Brimstone Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brimstone Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Lesaka Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lesaka Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Brimstone Investment and Lesaka Technologies

The main advantage of trading using opposite Brimstone Investment and Lesaka Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brimstone Investment 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.

The idea behind Brimstone Investment and Lesaka Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.