Correlation Between Deneb Investments and Lesaka Technologies

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Can any of the company-specific risk be diversified away by investing in both Deneb Investments 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 Deneb Investments and Lesaka Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deneb Investments and Lesaka Technologies, you can compare the effects of market volatilities on Deneb Investments 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 Deneb Investments with a short position of Lesaka Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deneb Investments and Lesaka Technologies.

Diversification Opportunities for Deneb Investments and Lesaka Technologies

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Deneb and Lesaka is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Deneb Investments and Lesaka Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesaka Technologies and Deneb Investments 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 Deneb Investments 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 Deneb Investments i.e., Deneb Investments and Lesaka Technologies go up and down completely randomly.

Pair Corralation between Deneb Investments and Lesaka Technologies

Assuming the 90 days trading horizon Deneb Investments is expected to generate 2.79 times less return on investment than Lesaka Technologies. But when comparing it to its historical volatility, Deneb Investments is 1.2 times less risky than Lesaka Technologies. It trades about 0.03 of its potential returns per unit of risk. Lesaka Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  880,000  in Lesaka Technologies on September 5, 2024 and sell it today you would earn a total of  87,100  from holding Lesaka Technologies or generate 9.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.44%
ValuesDaily Returns

Deneb Investments  vs.  Lesaka Technologies

 Performance 
       Timeline  
Deneb Investments 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Deneb Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Deneb Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Lesaka Technologies 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Lesaka Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Lesaka Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Deneb Investments and Lesaka Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Deneb Investments and Lesaka Technologies

The main advantage of trading using opposite Deneb Investments and Lesaka Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deneb Investments 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 Deneb Investments 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.
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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