Correlation Between Swire Pacific and Power Assets
Can any of the company-specific risk be diversified away by investing in both Swire Pacific and Power Assets 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 Power Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swire Pacific and Power Assets Holdings, you can compare the effects of market volatilities on Swire Pacific and Power Assets 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 Power Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swire Pacific and Power Assets.
Diversification Opportunities for Swire Pacific and Power Assets
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Swire and Power is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Swire Pacific and Power Assets Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Assets Holdings 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 Power Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Assets Holdings has no effect on the direction of Swire Pacific i.e., Swire Pacific and Power Assets go up and down completely randomly.
Pair Corralation between Swire Pacific and Power Assets
Assuming the 90 days horizon Swire Pacific is expected to under-perform the Power Assets. But the pink sheet apears to be less risky and, when comparing its historical volatility, Swire Pacific is 1.04 times less risky than Power Assets. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Power Assets Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 557.00 in Power Assets Holdings on August 29, 2024 and sell it today you would earn a total of 88.00 from holding Power Assets Holdings or generate 15.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swire Pacific vs. Power Assets Holdings
Performance |
| Timeline |
| Swire Pacific |
| Power Assets Holdings |
Swire Pacific and Power Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swire Pacific and Power Assets
The main advantage of trading using opposite Swire Pacific and Power Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swire Pacific position performs unexpectedly, Power Assets 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 Power Assets will offset losses from the drop in Power Assets' long position.| Swire Pacific vs. CK Hutchison Holdings | Swire Pacific vs. Marubeni | Swire Pacific vs. Sumitomo Corp ADR | Swire Pacific vs. Marubeni Corp ADR |
| Power Assets vs. TransAlta Corp | Power Assets vs. Pampa Energia SA | Power Assets vs. Vistra Energy Corp | Power Assets vs. NRG Energy |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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