Correlation Between Lesaka Technologies and Prosus NV

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

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

Diversification Opportunities for Lesaka Technologies and Prosus NV

-0.27

Correlation Coefficient

Lesaka Technologies  Prosus NV

Very good diversification

The 3 months correlation between Lesaka and Prosus is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lesaka Technologies and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV 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 Prosus NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosus NV has no effect on the direction of Lesaka Technologies i.e., Lesaka Technologies and Prosus NV go up and down completely randomly.

Pair Corralation between Lesaka Technologies and Prosus NV

Assuming the 90 days trading horizon Lesaka Technologies is expected to generate 2.08 times more return on investment than Prosus NV. However, Lesaka Technologies is 2.08 times more volatile than Prosus NV. It trades about 0.04 of its potential returns per unit of risk. Prosus NV is currently generating about 0.08 per unit of risk. If you would invest  816,300  in Lesaka Technologies on October 7, 2024 and sell it today you would earn a total of  86,800  from holding Lesaka Technologies or generate 10.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

Lesaka Technologies  vs.  Prosus NV

Lesaka Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lesaka Technologies are ranked lower than 3 (%) 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.

Prosus NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosus NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Prosus NV 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 Prosus NV

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

The idea behind Lesaka Technologies and Prosus NV 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.