Correlation Between Lesaka Technologies and Verint Systems

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

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

Diversification Opportunities for Lesaka Technologies and Verint Systems

-0.1

Correlation Coefficient

Lesaka Technologies  Verint Systems

Good diversification

The 3 months correlation between Lesaka and Verint is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lesaka Technologies and Verint Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verint Systems 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 Verint Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verint Systems has no effect on the direction of Lesaka Technologies i.e., Lesaka Technologies and Verint Systems go up and down completely randomly.

Pair Corralation between Lesaka Technologies and Verint Systems

Given the investment horizon of 90 days Lesaka Technologies is expected to under-perform the Verint Systems. But the stock apears to be less risky and, when comparing its historical volatility, Lesaka Technologies is 4.2 times less risky than Verint Systems. The stock trades about -0.15 of its potential returns per unit of risk. The Verint Systems is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,482  in Verint Systems on September 24, 2024 and sell it today you would earn a total of  205.00  from holding Verint Systems or generate 8.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lesaka Technologies  vs.  Verint Systems

Lesaka Technologies

Risk-Adjusted Performance

4 of 100

OK

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. Despite quite uncertain basic indicators, Lesaka Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Verint Systems

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Verint Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Verint Systems may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lesaka Technologies and Verint Systems

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

The idea behind Lesaka Technologies and Verint Systems 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.