Correlation Between Henderson Land and Swire Pacific
Can any of the company-specific risk be diversified away by investing in both Henderson Land and Swire Pacific 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 Henderson Land and Swire Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henderson Land Development and Swire Pacific, you can compare the effects of market volatilities on Henderson Land and Swire Pacific 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 Henderson Land with a short position of Swire Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henderson Land and Swire Pacific.
Diversification Opportunities for Henderson Land and Swire Pacific
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Henderson and Swire is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Henderson Land Development and Swire Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swire Pacific and Henderson Land 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 Henderson Land Development are associated (or correlated) with Swire Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swire Pacific has no effect on the direction of Henderson Land i.e., Henderson Land and Swire Pacific go up and down completely randomly.
Pair Corralation between Henderson Land and Swire Pacific
Assuming the 90 days horizon Henderson Land is expected to generate 1.4 times less return on investment than Swire Pacific. In addition to that, Henderson Land is 1.31 times more volatile than Swire Pacific. It trades about 0.03 of its total potential returns per unit of risk. Swire Pacific is currently generating about 0.05 per unit of volatility. If you would invest 744.00 in Swire Pacific on November 3, 2024 and sell it today you would earn a total of 126.00 from holding Swire Pacific or generate 16.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Henderson Land Development vs. Swire Pacific
Performance |
| Timeline |
| Henderson Land Devel |
| Swire Pacific |
Henderson Land and Swire Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henderson Land and Swire Pacific
The main advantage of trading using opposite Henderson Land and Swire Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henderson Land position performs unexpectedly, Swire Pacific 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 Swire Pacific will offset losses from the drop in Swire Pacific's long position.| Henderson Land vs. Hang Lung Properties | Henderson Land vs. Sun Hung Kai | Henderson Land vs. Hong Kong and | Henderson Land vs. New World Development |
| Swire Pacific vs. CK Hutchison Holdings | Swire Pacific vs. Marubeni | Swire Pacific vs. Sumitomo Corp ADR | Swire Pacific vs. Marubeni Corp ADR |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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