Correlation Between Liberty Latin and Axiata Group

Can any of the company-specific risk be diversified away by investing in both Liberty Latin and Axiata Group 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 Axiata Group 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 Axiata Group Berhad, you can compare the effects of market volatilities on Liberty Latin and Axiata Group 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 Axiata Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Latin and Axiata Group.

Diversification Opportunities for Liberty Latin and Axiata Group

0.63

Correlation Coefficient

Liberty Latin  Axiata Group

Poor diversification

The 3 months correlation between Liberty and Axiata is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Latin America and Axiata Group Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axiata Group Berhad 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 Axiata Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axiata Group Berhad has no effect on the direction of Liberty Latin i.e., Liberty Latin and Axiata Group go up and down completely randomly.

Pair Corralation between Liberty Latin and Axiata Group

If you would invest  53.00  in Axiata Group Berhad on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Axiata Group Berhad or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

Liberty Latin America  vs.  Axiata Group Berhad

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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Axiata Group Berhad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axiata Group Berhad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Axiata Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Liberty Latin and Axiata Group

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

The idea behind Liberty Latin America and Axiata Group Berhad 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.