Correlation Between Swire Pacific and Sun Hung
Can any of the company-specific risk be diversified away by investing in both Swire Pacific and Sun Hung 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 Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swire Pacific and Sun Hung Kai, you can compare the effects of market volatilities on Swire Pacific and Sun Hung 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 Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swire Pacific and Sun Hung.
Diversification Opportunities for Swire Pacific and Sun Hung
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Swire and Sun is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Swire Pacific and Sun Hung Kai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Hung Kai 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 Sun Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Hung Kai has no effect on the direction of Swire Pacific i.e., Swire Pacific and Sun Hung go up and down completely randomly.
Pair Corralation between Swire Pacific and Sun Hung
Assuming the 90 days horizon Swire Pacific is expected to generate 1.13 times more return on investment than Sun Hung. However, Swire Pacific is 1.13 times more volatile than Sun Hung Kai. It trades about -0.03 of its potential returns per unit of risk. Sun Hung Kai is currently generating about -0.24 per unit of risk. If you would invest 837.00 in Swire Pacific on August 28, 2024 and sell it today you would lose (11.00) from holding Swire Pacific or give up 1.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swire Pacific vs. Sun Hung Kai
Performance |
| Timeline |
| Swire Pacific |
| Sun Hung Kai |
Swire Pacific and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swire Pacific and Sun Hung
The main advantage of trading using opposite Swire Pacific and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swire Pacific position performs unexpectedly, Sun Hung 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 Sun Hung will offset losses from the drop in Sun Hung's long position.| Swire Pacific vs. CK Hutchison Holdings | Swire Pacific vs. Marubeni | Swire Pacific vs. Sumitomo Corp ADR | Swire Pacific vs. Marubeni Corp ADR |
| Sun Hung vs. Hong Kong Land | Sun Hung vs. Wharf Holdings | Sun Hung vs. Holiday Island Holdings | Sun Hung vs. Bayport International 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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