Correlation Between KT and Liberty Latin
Can any of the company-specific risk be diversified away by investing in both KT 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 KT and Liberty Latin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KT Corporation and Liberty Latin America, you can compare the effects of market volatilities on KT 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 KT with a short position of Liberty Latin. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT and Liberty Latin.
Diversification Opportunities for KT and Liberty Latin
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KT and Liberty is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. 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 KT 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 KT Corporation 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 KT i.e., KT and Liberty Latin go up and down completely randomly.
Pair Corralation between KT and Liberty Latin
Allowing for the 90-day total investment horizon KT Corporation is expected to under-perform the Liberty Latin. But the stock apears to be less risky and, when comparing its historical volatility, KT Corporation is 1.72 times less risky than Liberty Latin. The stock trades about -0.06 of its potential returns per unit of risk. The Liberty Latin America is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 708.00 in Liberty Latin America on December 1, 2024 and sell it today you would lose (31.00) from holding Liberty Latin America or give up 4.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
KT Corp. vs. Liberty Latin America
Performance |
Timeline |
KT Corporation |
Liberty Latin America |
KT and Liberty Latin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KT and Liberty Latin
The main advantage of trading using opposite KT and Liberty Latin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT 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.KT vs. PLDT Inc ADR | KT vs. Telefonica Brasil SA | KT vs. TIM Participacoes SA | KT vs. Telkom Indonesia Tbk |
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Check out your portfolio center.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.
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