Correlation Between Lesaka Technologies and Afine Investments

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

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

Diversification Opportunities for Lesaka Technologies and Afine Investments

-0.4

Correlation Coefficient

Lesaka Technologies  Afine Investments

Very good diversification

The 3 months correlation between Lesaka and Afine is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lesaka Technologies and Afine Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afine Investments 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 Afine Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afine Investments has no effect on the direction of Lesaka Technologies i.e., Lesaka Technologies and Afine Investments go up and down completely randomly.

Pair Corralation between Lesaka Technologies and Afine Investments

Assuming the 90 days trading horizon Lesaka Technologies is expected to generate 1.41 times more return on investment than Afine Investments. However, Lesaka Technologies is 1.41 times more volatile than Afine Investments. It trades about 0.07 of its potential returns per unit of risk. Afine Investments is currently generating about 0.03 per unit of risk. 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 Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Lesaka Technologies  vs.  Afine Investments

Lesaka Technologies

Risk-Adjusted Performance

5 of 100

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.

Afine Investments

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Afine 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, Afine Investments is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lesaka Technologies and Afine Investments

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

The idea behind Lesaka Technologies and Afine Investments 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.