Correlation Between Liberty Latin and KT

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

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

Diversification Opportunities for Liberty Latin and KT

-0.49

Correlation Coefficient

Liberty Latin  KT

Very good diversification

The 3 months correlation between Liberty and KT is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Latin America and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Liberty Latin 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 Latin America 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 Latin i.e., Liberty Latin and KT go up and down completely randomly.

Pair Corralation between Liberty Latin and KT

Given the investment horizon of 90 days Liberty Latin America is expected to under-perform the KT. But the stock apears to be less risky and, when comparing its historical volatility, Liberty Latin America is 1.18 times less risky than KT. The stock trades about -0.25 of its potential returns per unit of risk. The KT Corporation is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  1,741  in KT Corporation on September 27, 2024 and sell it today you would lose (127.00) from holding KT Corporation or give up 7.29% of portfolio value over 90 days.

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

Liberty Latin America  vs.  KT Corp.

Liberty Latin America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Latin America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company 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 Latin and KT

The main advantage of trading using opposite Liberty Latin and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Latin 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 Latin America 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.