Correlation Between Liberty Broadband and JSL SA

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

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

Diversification Opportunities for Liberty Broadband and JSL SA

0.38

Correlation Coefficient

Liberty Broadband  JSL SA

Weak diversification

The 3 months correlation between Liberty and JSL is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband and JSL SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSL SA and Liberty Broadband 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 Broadband are associated (or correlated) with JSL SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSL SA has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and JSL SA go up and down completely randomly.

Pair Corralation between Liberty Broadband and JSL SA

Assuming the 90 days trading horizon Liberty Broadband is expected to under-perform the JSL SA. But the stock apears to be less risky and, when comparing its historical volatility, Liberty Broadband is 2.1 times less risky than JSL SA. The stock trades about -0.1 of its potential returns per unit of risk. The JSL SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  549.00  in JSL SA on October 25, 2024 and sell it today you would lose (2.00) from holding JSL SA or give up 0.36% of portfolio value over 90 days.

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

Liberty Broadband  vs.  JSL SA

Liberty Broadband

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Broadband has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Liberty Broadband is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JSL SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JSL SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Liberty Broadband and JSL SA

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

The idea behind Liberty Broadband and JSL SA 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.