Correlation Between Lesaka Technologies and Remgro

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

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

Diversification Opportunities for Lesaka Technologies and Remgro

0.01

Correlation Coefficient

Lesaka Technologies  Remgro

Significant diversification

The 3 months correlation between Lesaka and Remgro is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lesaka Technologies and Remgro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remgro 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 Remgro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remgro has no effect on the direction of Lesaka Technologies i.e., Lesaka Technologies and Remgro go up and down completely randomly.

Pair Corralation between Lesaka Technologies and Remgro

Assuming the 90 days trading horizon Lesaka Technologies is expected to generate 2.78 times more return on investment than Remgro. However, Lesaka Technologies is 2.78 times more volatile than Remgro. It trades about 0.03 of its potential returns per unit of risk. Remgro is currently generating about 0.03 per unit of risk. If you would invest  802,200  in Lesaka Technologies on October 5, 2024 and sell it today you would earn a total of  100,900  from holding Lesaka Technologies or generate 12.58% 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.  Remgro

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.

Remgro

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Lesaka Technologies and Remgro 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.