Correlation Between Grab Holdings and Liberty Latin

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

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

Diversification Opportunities for Grab Holdings and Liberty Latin

-0.8

Correlation Coefficient

Grab Holdings  Liberty Latin

Pay attention - limited upside

The 3 months correlation between Grab and Liberty is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Grab Holdings 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 Grab Holdings 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 Grab Holdings 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 Grab Holdings i.e., Grab Holdings and Liberty Latin go up and down completely randomly.

Pair Corralation between Grab Holdings and Liberty Latin

Given the investment horizon of 90 days Grab Holdings is expected to generate 1.12 times more return on investment than Liberty Latin. However, Grab Holdings is 1.12 times more volatile than Liberty Latin America. It trades about -0.08 of its potential returns per unit of risk. Liberty Latin America is currently generating about -0.38 per unit of risk. If you would invest  514.00  in Grab Holdings on September 25, 2024 and sell it today you would lose (20.00) from holding Grab Holdings or give up 3.89% of portfolio value over 90 days.

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

Grab Holdings  vs.  Liberty Latin America

Grab Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grab Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Grab Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

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 weak 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.

Pair Trading with Grab Holdings and Liberty Latin

The main advantage of trading using opposite Grab Holdings and Liberty Latin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grab Holdings 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 Grab Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.