Correlation Between Lesaka Technologies and Edgio

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

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

Diversification Opportunities for Lesaka Technologies and Edgio

0.56

Correlation Coefficient

Lesaka Technologies  Edgio

Very weak diversification

The 3 months correlation between Lesaka and Edgio is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lesaka Technologies and Edgio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgio Inc 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 Edgio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgio Inc has no effect on the direction of Lesaka Technologies i.e., Lesaka Technologies and Edgio go up and down completely randomly.

Pair Corralation between Lesaka Technologies and Edgio

Given the investment horizon of 90 days Lesaka Technologies is expected to generate 7.02 times less return on investment than Edgio. But when comparing it to its historical volatility, Lesaka Technologies is 7.11 times less risky than Edgio. It trades about 0.3 of its potential returns per unit of risk. Edgio Inc is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  698.00  in Edgio Inc on January 19, 2024 and sell it today you would earn a total of  622.00  from holding Edgio Inc or generate 89.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Lesaka Technologies  vs.  Edgio Inc

Lesaka Technologies

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lesaka Technologies are ranked lower than 13 (%) 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.

Edgio Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Edgio Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Edgio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lesaka Technologies and Edgio

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

The idea behind Lesaka Technologies and Edgio Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.