Correlation Between KT and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both KT and Liberty Broadband 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 KT and Liberty Broadband into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KT Corporation and Liberty Broadband Corp, you can compare the effects of market volatilities on KT and Liberty Broadband 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 KT with a short position of Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT and Liberty Broadband.
Diversification Opportunities for KT and Liberty Broadband
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KT and Liberty is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding KT Corp. and Liberty Broadband Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband Corp and KT 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 KT Corporation are associated (or correlated) with Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband Corp has no effect on the direction of KT i.e., KT and Liberty Broadband go up and down completely randomly.
Pair Corralation between KT and Liberty Broadband
Allowing for the 90-day total investment horizon KT Corporation is expected to generate 1.42 times more return on investment than Liberty Broadband. However, KT is 1.42 times more volatile than Liberty Broadband Corp. It trades about 0.05 of its potential returns per unit of risk. Liberty Broadband Corp is currently generating about 0.04 per unit of risk. If you would invest 1,225 in KT Corporation on August 27, 2024 and sell it today you would earn a total of 435.00 from holding KT Corporation or generate 35.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KT Corp. vs. Liberty Broadband Corp
Performance |
| Timeline |
| KT Corporation |
| Liberty Broadband Corp |
KT and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KT and Liberty Broadband
The main advantage of trading using opposite KT and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT position performs unexpectedly, Liberty Broadband 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 Liberty Broadband will offset losses from the drop in Liberty Broadband's long position.The idea behind KT Corporation and Liberty Broadband Corp 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.| Liberty Broadband vs. IHS Holding | Liberty Broadband vs. InterDigital | Liberty Broadband vs. Telephone and Data | Liberty Broadband vs. Telephone and Data |
Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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