Correlation Between Evertec and Lesaka Technologies

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

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

Diversification Opportunities for Evertec and Lesaka Technologies

0.22

Correlation Coefficient

Evertec  Lesaka Technologies

Modest diversification

The 3 months correlation between Evertec and Lesaka is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and Lesaka Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesaka Technologies and Evertec 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 Evertec 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 Evertec i.e., Evertec and Lesaka Technologies go up and down completely randomly.

Pair Corralation between Evertec and Lesaka Technologies

Given the investment horizon of 90 days Evertec is expected to generate 1.13 times more return on investment than Lesaka Technologies. However, Evertec is 1.13 times more volatile than Lesaka Technologies. It trades about 0.25 of its potential returns per unit of risk. Lesaka Technologies is currently generating about -0.02 per unit of risk. If you would invest  3,222  in Evertec on August 30, 2024 and sell it today you would earn a total of  363.00  from holding Evertec or generate 11.27% return on investment over 90 days.

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

Evertec  vs.  Lesaka Technologies

Evertec

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Evertec 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

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lesaka Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Lesaka Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evertec and Lesaka Technologies

The main advantage of trading using opposite Evertec and Lesaka Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evertec 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 Evertec 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.