Correlation Between Swire Properties and Evolution Mining
Can any of the company-specific risk be diversified away by investing in both Swire Properties and Evolution Mining 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 Evolution Mining 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 Evolution Mining Limited, you can compare the effects of market volatilities on Swire Properties and Evolution Mining 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 Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swire Properties and Evolution Mining.
Diversification Opportunities for Swire Properties and Evolution Mining
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Swire and Evolution is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Swire Properties Limited and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of Swire Properties i.e., Swire Properties and Evolution Mining go up and down completely randomly.
Pair Corralation between Swire Properties and Evolution Mining
Assuming the 90 days horizon Swire Properties Limited is expected to generate 1.91 times more return on investment than Evolution Mining. However, Swire Properties is 1.91 times more volatile than Evolution Mining Limited. It trades about 0.16 of its potential returns per unit of risk. Evolution Mining Limited is currently generating about 0.13 per unit of risk. If you would invest 131.00 in Swire Properties Limited on August 25, 2024 and sell it today you would earn a total of 60.00 from holding Swire Properties Limited or generate 45.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swire Properties Limited vs. Evolution Mining Limited
Performance |
| Timeline |
| Swire Properties |
| Evolution Mining |
Swire Properties and Evolution Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swire Properties and Evolution Mining
The main advantage of trading using opposite Swire Properties and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swire Properties position performs unexpectedly, Evolution Mining 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 Evolution Mining will offset losses from the drop in Evolution Mining's long position.| Swire Properties vs. Evolution Mining Limited | Swire Properties vs. Chunghwa Telecom Co | Swire Properties vs. MTI WIRELESS EDGE | Swire Properties vs. FANDIFI TECHNOLOGY P |
| Evolution Mining vs. Franco Nevada | Evolution Mining vs. Agnico Eagle Mines | Evolution Mining vs. Superior Plus Corp | Evolution Mining vs. NMI 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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