Correlation Between INDIKA ENERGY and Liberty Broadband

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

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

Diversification Opportunities for INDIKA ENERGY and Liberty Broadband

-0.46

Correlation Coefficient

INDIKA ENERGY  Liberty Broadband

Very good diversification

The 3 months correlation between INDIKA and Liberty is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding INDIKA ENERGY and Liberty Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband and INDIKA ENERGY 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 INDIKA ENERGY are associated (or correlated) with Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband has no effect on the direction of INDIKA ENERGY i.e., INDIKA ENERGY and Liberty Broadband go up and down completely randomly.

Pair Corralation between INDIKA ENERGY and Liberty Broadband

Assuming the 90 days trading horizon INDIKA ENERGY is expected to under-perform the Liberty Broadband. In addition to that, INDIKA ENERGY is 1.96 times more volatile than Liberty Broadband. It trades about -0.02 of its total potential returns per unit of risk. Liberty Broadband is currently generating about -0.05 per unit of volatility. If you would invest  7,350  in Liberty Broadband on October 11, 2024 and sell it today you would lose (100.00) from holding Liberty Broadband or give up 1.36% of portfolio value over 90 days.

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

INDIKA ENERGY  vs.  Liberty Broadband

INDIKA ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDIKA ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Liberty Broadband

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Broadband are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Liberty Broadband is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INDIKA ENERGY and Liberty Broadband

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

The idea behind INDIKA ENERGY and Liberty Broadband 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..