Correlation Between Priority Technology and Lesaka Technologies

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

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

Diversification Opportunities for Priority Technology and Lesaka Technologies

0.47

Correlation Coefficient

Priority Technology  Lesaka Technologies

Very weak diversification

The 3 months correlation between Priority and Lesaka is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Priority Technology Holdings and Lesaka Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesaka Technologies and Priority Technology 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 Priority Technology Holdings 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 Priority Technology i.e., Priority Technology and Lesaka Technologies go up and down completely randomly.

Pair Corralation between Priority Technology and Lesaka Technologies

Given the investment horizon of 90 days Priority Technology Holdings is expected to under-perform the Lesaka Technologies. In addition to that, Priority Technology is 1.48 times more volatile than Lesaka Technologies. It trades about -0.01 of its total potential returns per unit of risk. Lesaka Technologies is currently generating about 0.04 per unit of volatility. If you would invest  365.00  in Lesaka Technologies on February 14, 2024 and sell it today you would earn a total of  130.50  from holding Lesaka Technologies or generate 35.75% return on investment over 90 days.

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

Priority Technology Holdings  vs.  Lesaka Technologies

Priority Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Priority Technology Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Priority Technology may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Lesaka Technologies

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lesaka Technologies are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Lesaka Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Priority Technology and Lesaka Technologies

The main advantage of trading using opposite Priority Technology and Lesaka Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Priority Technology 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 Priority Technology Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.