Correlation Between Afine Investments and Lesaka Technologies

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

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

Diversification Opportunities for Afine Investments and Lesaka Technologies

-0.45

Correlation Coefficient

Afine Investments  Lesaka Technologies

Very good diversification

The 3 months correlation between Afine and Lesaka is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Afine Investments and Lesaka Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesaka Technologies and Afine Investments 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 Afine Investments are associated (or correlated) with Lesaka Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lesaka Technologies has no effect on the direction of Afine Investments i.e., Afine Investments and Lesaka Technologies go up and down completely randomly.

Pair Corralation between Afine Investments and Lesaka Technologies

Assuming the 90 days trading horizon Afine Investments is expected to generate 7.51 times less return on investment than Lesaka Technologies. But when comparing it to its historical volatility, Afine Investments is 1.38 times less risky than Lesaka Technologies. It trades about 0.01 of its potential returns per unit of risk. Lesaka Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  899,900  in Lesaka Technologies on September 3, 2024 and sell it today you would earn a total of  60,000  from holding Lesaka Technologies or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Afine Investments  vs.  Lesaka Technologies

Afine Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Afine Investments has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

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 January 2025.

Pair Trading with Afine Investments and Lesaka Technologies

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

The idea behind Afine Investments and Lesaka Technologies 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.