Correlation Between Liberty Global and Millicom International

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Can any of the company-specific risk be diversified away by investing in both Liberty Global and Millicom 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 Global and Millicom International 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 Millicom International Cellular, you can compare the effects of market volatilities on Liberty Global and Millicom 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 Global with a short position of Millicom International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Global and Millicom International.

Diversification Opportunities for Liberty Global and Millicom International

LibertyMillicomDiversified AwayLibertyMillicomDiversified Away100%
-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Liberty and Millicom is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Global PLC and Millicom International Cellula in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millicom International 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 Millicom International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millicom International has no effect on the direction of Liberty Global i.e., Liberty Global and Millicom International go up and down completely randomly.

Pair Corralation between Liberty Global and Millicom International

Assuming the 90 days horizon Liberty Global PLC is expected to under-perform the Millicom International. But the stock apears to be less risky and, when comparing its historical volatility, Liberty Global PLC is 1.03 times less risky than Millicom International. The stock trades about -0.2 of its potential returns per unit of risk. The Millicom International Cellular is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  2,744  in Millicom International Cellular on November 25, 2024 and sell it today you would lose (53.00) from holding Millicom International Cellular or give up 1.93% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Liberty Global PLC  vs.  Millicom International Cellula

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-50510
JavaScript chart by amCharts 3.21.15LBTYA TIGO
       Timeline  
Liberty Global PLC 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Liberty Global PLC 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 somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb10.51111.51212.51313.514
Millicom International 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Millicom International Cellular are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Millicom International may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2425262728

Liberty Global and Millicom International Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.81-2.1-1.4-0.690.00.641.291.952.613.26 0.070.080.090.100.110.120.130.14
JavaScript chart by amCharts 3.21.15LBTYA TIGO
       Returns  

Pair Trading with Liberty Global and Millicom International

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

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