Correlation Between Bytes Technology and Lesaka Technologies

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

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

Diversification Opportunities for Bytes Technology and Lesaka Technologies

-0.37

Correlation Coefficient

Bytes Technology  Lesaka Technologies

Very good diversification

The 3 months correlation between Bytes and Lesaka is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bytes Technology and Lesaka Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesaka Technologies and Bytes Technology 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 Bytes Technology 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 Bytes Technology i.e., Bytes Technology and Lesaka Technologies go up and down completely randomly.

Pair Corralation between Bytes Technology and Lesaka Technologies

Assuming the 90 days trading horizon Bytes Technology is expected to generate 1.2 times more return on investment than Lesaka Technologies. However, Bytes Technology is 1.2 times more volatile than Lesaka Technologies. It trades about 0.11 of its potential returns per unit of risk. Lesaka Technologies is currently generating about 0.0 per unit of risk. If you would invest  999,100  in Bytes Technology on December 27, 2024 and sell it today you would earn a total of  171,800  from holding Bytes Technology or generate 17.2% return on investment over 90 days.

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

Bytes Technology  vs.  Lesaka Technologies

Bytes Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bytes Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Bytes Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 rather sound technical and fundamental indicators, Lesaka Technologies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bytes Technology and Lesaka Technologies

The main advantage of trading using opposite Bytes Technology and Lesaka Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bytes Technology 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 Bytes Technology 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 Commodity Directory module to find actively traded commodities issued by global exchanges.