Correlation Between Euronet Worldwide and Lesaka Technologies

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

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

Diversification Opportunities for Euronet Worldwide and Lesaka Technologies

0.33

Correlation Coefficient

Euronet Worldwide  Lesaka Technologies

Weak diversification

The 3 months correlation between Euronet and Lesaka is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Euronet Worldwide and Lesaka Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesaka Technologies and Euronet Worldwide 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 Euronet Worldwide 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 Euronet Worldwide i.e., Euronet Worldwide and Lesaka Technologies go up and down completely randomly.

Pair Corralation between Euronet Worldwide and Lesaka Technologies

Given the investment horizon of 90 days Euronet Worldwide is expected to generate 5.26 times less return on investment than Lesaka Technologies. But when comparing it to its historical volatility, Euronet Worldwide is 1.23 times less risky than Lesaka Technologies. It trades about 0.02 of its potential returns per unit of risk. Lesaka Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  455.00  in Lesaka Technologies on September 22, 2024 and sell it today you would earn a total of  47.00  from holding Lesaka Technologies or generate 10.33% return on investment over 90 days.

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

Euronet Worldwide  vs.  Lesaka Technologies

Euronet Worldwide

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Euronet Worldwide are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Euronet Worldwide is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Lesaka Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lesaka Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Lesaka Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Euronet Worldwide and Lesaka Technologies

The main advantage of trading using opposite Euronet Worldwide and Lesaka Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euronet Worldwide 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 Euronet Worldwide 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.