Correlation Between Liberty Broadband and KT

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

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

Diversification Opportunities for Liberty Broadband and KT

0.23

Correlation Coefficient

Liberty Broadband  KT

Modest diversification

The 3 months correlation between Liberty and KT is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband Corp and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Liberty Broadband 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 Liberty Broadband Corp are associated (or correlated) with KT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Corporation has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and KT go up and down completely randomly.

Pair Corralation between Liberty Broadband and KT

Assuming the 90 days horizon Liberty Broadband is expected to generate 2.05 times less return on investment than KT. But when comparing it to its historical volatility, Liberty Broadband Corp is 1.45 times less risky than KT. It trades about 0.04 of its potential returns per unit of risk. KT Corporation is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,244  in KT Corporation on September 3, 2024 and sell it today you would earn a total of  571.00  from holding KT Corporation or generate 45.9% return on investment over 90 days.

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

Liberty Broadband Corp  vs.  KT Corp.

Liberty Broadband Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Broadband Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Liberty Broadband is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

KT Corporation

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, KT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liberty Broadband and KT

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

The idea behind Liberty Broadband Corp and KT Corporation 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 Anywhere module to track or share privately all of your investments from the convenience of any device.