Correlation Between Lesaka Technologies and DRDGOLD

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

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

Diversification Opportunities for Lesaka Technologies and DRDGOLD

0.15

Correlation Coefficient

Lesaka Technologies  DRDGOLD

Average diversification

The 3 months correlation between Lesaka and DRDGOLD is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lesaka Technologies and DRDGOLD Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRDGOLD Limited 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 DRDGOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRDGOLD Limited has no effect on the direction of Lesaka Technologies i.e., Lesaka Technologies and DRDGOLD go up and down completely randomly.

Pair Corralation between Lesaka Technologies and DRDGOLD

Assuming the 90 days trading horizon Lesaka Technologies is expected to generate 0.82 times more return on investment than DRDGOLD. However, Lesaka Technologies is 1.21 times less risky than DRDGOLD. It trades about 0.24 of its potential returns per unit of risk. DRDGOLD Limited is currently generating about -0.13 per unit of risk. If you would invest  902,000  in Lesaka Technologies on October 10, 2024 and sell it today you would earn a total of  66,400  from holding Lesaka Technologies or generate 7.36% return on investment over 90 days.

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

Lesaka Technologies  vs.  DRDGOLD Limited

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 February 2025.

DRDGOLD Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DRDGOLD Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, DRDGOLD is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lesaka Technologies and DRDGOLD

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

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