Correlation Between Jardine Matheson and Swire Pacific
Can any of the company-specific risk be diversified away by investing in both Jardine Matheson 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 Jardine Matheson and Swire Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jardine Matheson Holdings and Swire Pacific Ltd, you can compare the effects of market volatilities on Jardine Matheson 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 Jardine Matheson with a short position of Swire Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jardine Matheson and Swire Pacific.
Diversification Opportunities for Jardine Matheson and Swire Pacific
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Jardine and Swire is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Jardine Matheson Holdings and Swire Pacific Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swire Pacific and Jardine Matheson 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 Jardine Matheson Holdings 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 Jardine Matheson i.e., Jardine Matheson and Swire Pacific go up and down completely randomly.
Pair Corralation between Jardine Matheson and Swire Pacific
Assuming the 90 days horizon Jardine Matheson Holdings is expected to generate 0.71 times more return on investment than Swire Pacific. However, Jardine Matheson Holdings is 1.41 times less risky than Swire Pacific. It trades about 0.04 of its potential returns per unit of risk. Swire Pacific Ltd is currently generating about 0.02 per unit of risk. If you would invest 3,750 in Jardine Matheson Holdings on September 1, 2024 and sell it today you would earn a total of 364.00 from holding Jardine Matheson Holdings or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Jardine Matheson Holdings vs. Swire Pacific Ltd
Performance |
| Timeline |
| Jardine Matheson Holdings |
| Swire Pacific |
Jardine Matheson and Swire Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jardine Matheson and Swire Pacific
The main advantage of trading using opposite Jardine Matheson and Swire Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jardine Matheson 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.| Jardine Matheson vs. 3M Company | Jardine Matheson vs. CK Hutchison Holdings | Jardine Matheson vs. Swire Pacific Ltd | Jardine Matheson vs. Teijin |
| Swire Pacific vs. CITIC Limited | Swire Pacific vs. Fosun International | Swire Pacific vs. Cibl Inc | Swire Pacific vs. Jardine Matheson Holdings |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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