Correlation Between Swire Properties and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Swire Properties and GigaMedia 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 Swire Properties and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swire Properties Limited and GigaMedia, you can compare the effects of market volatilities on Swire Properties and GigaMedia 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 Swire Properties with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swire Properties and GigaMedia.
Diversification Opportunities for Swire Properties and GigaMedia
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Swire and GigaMedia is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Swire Properties Limited and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and Swire Properties 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 Swire Properties Limited are associated (or correlated) with GigaMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaMedia has no effect on the direction of Swire Properties i.e., Swire Properties and GigaMedia go up and down completely randomly.
Pair Corralation between Swire Properties and GigaMedia
Assuming the 90 days horizon Swire Properties Limited is expected to generate 3.26 times more return on investment than GigaMedia. However, Swire Properties is 3.26 times more volatile than GigaMedia. It trades about 0.08 of its potential returns per unit of risk. GigaMedia is currently generating about 0.03 per unit of risk. If you would invest 84.00 in Swire Properties Limited on September 14, 2024 and sell it today you would earn a total of 105.00 from holding Swire Properties Limited or generate 125.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.64% |
| Values | Daily Returns |
Swire Properties Limited vs. GigaMedia
Performance |
| Timeline |
| Swire Properties |
| GigaMedia |
Swire Properties and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swire Properties and GigaMedia
The main advantage of trading using opposite Swire Properties and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swire Properties position performs unexpectedly, GigaMedia 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 GigaMedia will offset losses from the drop in GigaMedia's long position.| Swire Properties vs. GigaMedia | Swire Properties vs. VULCAN MATERIALS | Swire Properties vs. HOCHSCHILD MINING | Swire Properties vs. Scientific Games |
| GigaMedia vs. AOYAMA TRADING | GigaMedia vs. REGAL ASIAN INVESTMENTS | GigaMedia vs. AM EAGLE OUTFITTERS | GigaMedia vs. HK Electric Investments |
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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