Correlation Between Italtile and Lesaka Technologies

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

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

Diversification Opportunities for Italtile and Lesaka Technologies

0.54

Correlation Coefficient

Italtile  Lesaka Technologies

Very weak diversification

The 3 months correlation between Italtile and Lesaka is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Italtile and Lesaka Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesaka Technologies and Italtile 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 Italtile 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 Italtile i.e., Italtile and Lesaka Technologies go up and down completely randomly.

Pair Corralation between Italtile and Lesaka Technologies

Assuming the 90 days trading horizon Italtile is expected to generate 0.56 times more return on investment than Lesaka Technologies. However, Italtile is 1.78 times less risky than Lesaka Technologies. It trades about 0.08 of its potential returns per unit of risk. Lesaka Technologies is currently generating about 0.03 per unit of risk. If you would invest  115,900  in Italtile on September 29, 2024 and sell it today you would earn a total of  23,400  from holding Italtile or generate 20.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Italtile  vs.  Lesaka Technologies

Italtile

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Italtile 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, Italtile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lesaka Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lesaka Technologies are ranked lower than 4 (%) 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.

Pair Trading with Italtile and Lesaka Technologies

The main advantage of trading using opposite Italtile and Lesaka Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Italtile 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 Italtile 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.