Correlation Between Confluent and Lesaka Technologies

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

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

Diversification Opportunities for Confluent and Lesaka Technologies

0.69

Correlation Coefficient

Confluent  Lesaka Technologies

Poor diversification

The 3 months correlation between Confluent and Lesaka is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Confluent and Lesaka Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesaka Technologies and Confluent 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 Confluent 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 Confluent i.e., Confluent and Lesaka Technologies go up and down completely randomly.

Pair Corralation between Confluent and Lesaka Technologies

Given the investment horizon of 90 days Confluent is expected to generate 1.08 times more return on investment than Lesaka Technologies. However, Confluent is 1.08 times more volatile than Lesaka Technologies. It trades about 0.16 of its potential returns per unit of risk. Lesaka Technologies is currently generating about 0.13 per unit of risk. If you would invest  2,032  in Confluent on August 9, 2024 and sell it today you would earn a total of  681.00  from holding Confluent or generate 33.51% return on investment over 90 days.

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

Confluent  vs.  Lesaka Technologies

Confluent

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Confluent are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Confluent unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lesaka Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lesaka Technologies are ranked lower than 10 (%) 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 Confluent and Lesaka Technologies

The main advantage of trading using opposite Confluent and Lesaka Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Confluent 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 Confluent 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.