Correlation Between Lesaka Technologies and Payfare

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

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

Diversification Opportunities for Lesaka Technologies and Payfare

0.36

Correlation Coefficient

Lesaka Technologies  Payfare

Weak diversification

The 3 months correlation between Lesaka and Payfare is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lesaka Technologies and Payfare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payfare and Lesaka Technologies 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 Lesaka Technologies are associated (or correlated) with Payfare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payfare has no effect on the direction of Lesaka Technologies i.e., Lesaka Technologies and Payfare go up and down completely randomly.

Pair Corralation between Lesaka Technologies and Payfare

Given the investment horizon of 90 days Lesaka Technologies is expected to under-perform the Payfare. In addition to that, Lesaka Technologies is 2.51 times more volatile than Payfare. It trades about -0.03 of its total potential returns per unit of risk. Payfare is currently generating about 0.09 per unit of volatility. If you would invest  266.00  in Payfare on December 29, 2024 and sell it today you would earn a total of  10.00  from holding Payfare or generate 3.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	72.13%
Values	Daily Returns

Lesaka Technologies  vs.  Payfare

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. Despite quite persistent basic indicators, Lesaka Technologies is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Payfare

Risk-Adjusted Performance

OK

Over the last 90 days Payfare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Payfare is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lesaka Technologies and Payfare

The main advantage of trading using opposite Lesaka Technologies and Payfare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lesaka Technologies position performs unexpectedly, Payfare 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 Payfare will offset losses from the drop in Payfare's long position.

The idea behind Lesaka Technologies and Payfare 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.