Correlation Between Liberty Latin and ATN International

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

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

Diversification Opportunities for Liberty Latin and ATN International

0.83

Correlation Coefficient

Liberty Latin  ATN International

Very poor diversification

The 3 months correlation between Liberty and ATN is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Latin America and ATN International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATN International and Liberty Latin 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 Latin America are associated (or correlated) with ATN International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATN International has no effect on the direction of Liberty Latin i.e., Liberty Latin and ATN International go up and down completely randomly.

Pair Corralation between Liberty Latin and ATN International

Assuming the 90 days horizon Liberty Latin America is expected to under-perform the ATN International. But the stock apears to be less risky and, when comparing its historical volatility, Liberty Latin America is 1.36 times less risky than ATN International. The stock trades about -0.11 of its potential returns per unit of risk. The ATN International is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,263  in ATN International on September 26, 2024 and sell it today you would lose (609.00) from holding ATN International or give up 26.91% of portfolio value over 90 days.

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

Liberty Latin America  vs.  ATN International

Liberty Latin America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Latin America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

ATN International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATN International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Liberty Latin and ATN International

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

The idea behind Liberty Latin America and ATN International 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.