Correlation Between Swire Pacific and RCABS
Can any of the company-specific risk be diversified away by investing in both Swire Pacific and RCABS 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 RCABS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swire Pacific Ltd and RCABS Inc, you can compare the effects of market volatilities on Swire Pacific and RCABS 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 RCABS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swire Pacific and RCABS.
Diversification Opportunities for Swire Pacific and RCABS
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Swire and RCABS is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Swire Pacific Ltd and RCABS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCABS Inc 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 Ltd are associated (or correlated) with RCABS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCABS Inc has no effect on the direction of Swire Pacific i.e., Swire Pacific and RCABS go up and down completely randomly.
Pair Corralation between Swire Pacific and RCABS
Assuming the 90 days horizon Swire Pacific Ltd is expected to generate 0.29 times more return on investment than RCABS. However, Swire Pacific Ltd is 3.42 times less risky than RCABS. It trades about 0.06 of its potential returns per unit of risk. RCABS Inc is currently generating about -0.02 per unit of risk. If you would invest 438.00 in Swire Pacific Ltd on November 29, 2024 and sell it today you would earn a total of 246.00 from holding Swire Pacific Ltd or generate 56.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.26% |
| Values | Daily Returns |
Swire Pacific Ltd vs. RCABS Inc
Performance |
| Timeline |
| Swire Pacific |
| RCABS Inc |
Swire Pacific and RCABS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swire Pacific and RCABS
The main advantage of trading using opposite Swire Pacific and RCABS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swire Pacific position performs unexpectedly, RCABS 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 RCABS will offset losses from the drop in RCABS's long position.| Swire Pacific vs. CITIC Limited | Swire Pacific vs. Fosun International | Swire Pacific vs. Cibl Inc | Swire Pacific vs. Jardine Matheson 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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