Correlation Between Liberty Broadband and SK Telecom

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

By analyzing existing cross correlation between Liberty Broadband Corp and SK Telecom Co, you can compare the effects of market volatilities on Liberty Broadband and SK Telecom 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 SK Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and SK Telecom.

Diversification Opportunities for Liberty Broadband and SK Telecom

0.12

Correlation Coefficient

Liberty Broadband  SK Telecom

Average diversification

The 3 months correlation between Liberty and SKM is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband Corp and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom 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 Corp are associated (or correlated) with SK Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Telecom has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and SK Telecom go up and down completely randomly.

Pair Corralation between Liberty Broadband and SK Telecom

Assuming the 90 days horizon Liberty Broadband is expected to generate 1.12 times less return on investment than SK Telecom. But when comparing it to its historical volatility, Liberty Broadband Corp is 1.94 times less risky than SK Telecom. It trades about 0.07 of its potential returns per unit of risk. SK Telecom Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,329  in SK Telecom Co on September 3, 2024 and sell it today you would earn a total of  64.00  from holding SK Telecom Co or generate 2.75% return on investment over 90 days.

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

Liberty Broadband Corp  vs.  SK Telecom Co

Liberty Broadband Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Broadband Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Liberty Broadband is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

SK Telecom

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SK Telecom Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, SK Telecom is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Liberty Broadband and SK Telecom

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

The idea behind Liberty Broadband Corp and SK Telecom Co 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.