Correlation Between Swire Pacific and Griffon
Can any of the company-specific risk be diversified away by investing in both Swire Pacific and Griffon 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 Pacific and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swire Pacific and Griffon, you can compare the effects of market volatilities on Swire Pacific and Griffon 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 Pacific with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swire Pacific and Griffon.
Diversification Opportunities for Swire Pacific and Griffon
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Swire and Griffon is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Swire Pacific and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Swire Pacific 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 Pacific are associated (or correlated) with Griffon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffon has no effect on the direction of Swire Pacific i.e., Swire Pacific and Griffon go up and down completely randomly.
Pair Corralation between Swire Pacific and Griffon
Assuming the 90 days horizon Swire Pacific is expected to generate 582.48 times less return on investment than Griffon. But when comparing it to its historical volatility, Swire Pacific is 2.66 times less risky than Griffon. It trades about 0.0 of its potential returns per unit of risk. Griffon is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 6,349 in Griffon on August 31, 2024 and sell it today you would earn a total of 2,002 from holding Griffon or generate 31.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swire Pacific vs. Griffon
Performance |
| Timeline |
| Swire Pacific |
| Griffon |
Swire Pacific and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swire Pacific and Griffon
The main advantage of trading using opposite Swire Pacific and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swire Pacific position performs unexpectedly, Griffon 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 Griffon will offset losses from the drop in Griffon's long position.| Swire Pacific vs. Sumitomo Corp ADR | Swire Pacific vs. Itochu Corp ADR | Swire Pacific vs. Mitsubishi Corp | Swire Pacific vs. ITOCHU |
| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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