Correlation Between Dlocal and Lesaka Technologies

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

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

Diversification Opportunities for Dlocal and Lesaka Technologies

0.24

Correlation Coefficient

Dlocal  Lesaka Technologies

Modest diversification

The 3 months correlation between Dlocal and Lesaka is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dlocal and Lesaka Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesaka Technologies and Dlocal 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 Dlocal 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 Dlocal i.e., Dlocal and Lesaka Technologies go up and down completely randomly.

Pair Corralation between Dlocal and Lesaka Technologies

Considering the 90-day investment horizon Dlocal is expected to under-perform the Lesaka Technologies. In addition to that, Dlocal is 1.32 times more volatile than Lesaka Technologies. It trades about -0.03 of its total potential returns per unit of risk. Lesaka Technologies is currently generating about 0.07 per unit of volatility. If you would invest  368.00  in Lesaka Technologies on September 25, 2024 and sell it today you would earn a total of  151.00  from holding Lesaka Technologies or generate 41.03% return on investment over 90 days.

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

Dlocal  vs.  Lesaka Technologies

Dlocal

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dlocal are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting essential indicators, Dlocal displayed solid returns over the last few months and may actually be approaching a breakup point.

Lesaka Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lesaka Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Lesaka Technologies is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Dlocal and Lesaka Technologies

The main advantage of trading using opposite Dlocal and Lesaka Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dlocal 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 Dlocal 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.