Correlation Between Liberty Global and KT

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

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

Diversification Opportunities for Liberty Global and KT

-0.44

Correlation Coefficient

Liberty Global  KT

Very good diversification

The 3 months correlation between Liberty and KT is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Global PLC and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Liberty Global 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 Global PLC 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 Global i.e., Liberty Global and KT go up and down completely randomly.

Pair Corralation between Liberty Global and KT

Assuming the 90 days horizon Liberty Global PLC is expected to under-perform the KT. In addition to that, Liberty Global is 3.15 times more volatile than KT Corporation. It trades about -0.08 of its total potential returns per unit of risk. KT Corporation is currently generating about 0.04 per unit of volatility. If you would invest  1,543  in KT Corporation on September 27, 2024 and sell it today you would earn a total of  71.00  from holding KT Corporation or generate 4.6% return on investment over 90 days.

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

Liberty Global PLC  vs.  KT Corp.

Liberty Global PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Global PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

KT Corporation

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, KT is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Liberty Global and KT

The main advantage of trading using opposite Liberty Global and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Global 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 Global PLC 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.