Correlation Between FingerMotion and Liberty Latin

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

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

Diversification Opportunities for FingerMotion and Liberty Latin

0.27

Correlation Coefficient

FingerMotion  Liberty Latin

Modest diversification

The 3 months correlation between FingerMotion and Liberty is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding FingerMotion and Liberty Latin America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Latin America and FingerMotion 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 FingerMotion are associated (or correlated) with Liberty Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Latin America has no effect on the direction of FingerMotion i.e., FingerMotion and Liberty Latin go up and down completely randomly.

Pair Corralation between FingerMotion and Liberty Latin

Given the investment horizon of 90 days FingerMotion is expected to under-perform the Liberty Latin. But the stock apears to be less risky and, when comparing its historical volatility, FingerMotion is 1.01 times less risky than Liberty Latin. The stock trades about -0.09 of its potential returns per unit of risk. The Liberty Latin America is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  736.00  in Liberty Latin America on September 12, 2024 and sell it today you would lose (44.00) from holding Liberty Latin America or give up 5.98% of portfolio value over 90 days.

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

FingerMotion  vs.  Liberty Latin America

FingerMotion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FingerMotion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, FingerMotion is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

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 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.

Pair Trading with FingerMotion and Liberty Latin

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

The idea behind FingerMotion and Liberty Latin America 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.