Correlation Between Liberty Global and Grab Holdings

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

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

Diversification Opportunities for Liberty Global and Grab Holdings

0.87

Correlation Coefficient

Liberty Global  Grab Holdings

Very poor diversification

The 3 months correlation between Liberty and Grab is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Global PLC and Grab Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grab Holdings and Liberty Global 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 Global PLC are associated (or correlated) with Grab Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grab Holdings has no effect on the direction of Liberty Global i.e., Liberty Global and Grab Holdings go up and down completely randomly.

Pair Corralation between Liberty Global and Grab Holdings

Assuming the 90 days horizon Liberty Global is expected to generate 1.42 times less return on investment than Grab Holdings. But when comparing it to its historical volatility, Liberty Global PLC is 1.31 times less risky than Grab Holdings. It trades about 0.15 of its potential returns per unit of risk. Grab Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  332.00  in Grab Holdings on October 3, 2024 and sell it today you would earn a total of  140.00  from holding Grab Holdings or generate 42.17% return on investment over 90 days.

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

Liberty Global PLC  vs.  Grab Holdings

Liberty Global PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Global PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Liberty Global sustained solid returns over the last few months and may actually be approaching a breakup point.

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 unfluctuating basic indicators, Grab Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liberty Global and Grab Holdings

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

The idea behind Liberty Global PLC and Grab Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.