Correlation Between Swire Pacific and CITIC
Can any of the company-specific risk be diversified away by investing in both Swire Pacific and CITIC 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 CITIC 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 CITIC Limited, you can compare the effects of market volatilities on Swire Pacific and CITIC 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 CITIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swire Pacific and CITIC.
Diversification Opportunities for Swire Pacific and CITIC
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Swire and CITIC is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Swire Pacific Ltd and CITIC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Limited 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 CITIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Limited has no effect on the direction of Swire Pacific i.e., Swire Pacific and CITIC go up and down completely randomly.
Pair Corralation between Swire Pacific and CITIC
Assuming the 90 days horizon Swire Pacific is expected to generate 3.07 times less return on investment than CITIC. In addition to that, Swire Pacific is 1.24 times more volatile than CITIC Limited. It trades about 0.02 of its total potential returns per unit of risk. CITIC Limited is currently generating about 0.08 per unit of volatility. If you would invest 88.00 in CITIC Limited on September 1, 2024 and sell it today you would earn a total of 22.00 from holding CITIC Limited or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.6% |
| Values | Daily Returns |
Swire Pacific Ltd vs. CITIC Limited
Performance |
| Timeline |
| Swire Pacific |
| CITIC Limited |
Swire Pacific and CITIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swire Pacific and CITIC
The main advantage of trading using opposite Swire Pacific and CITIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swire Pacific position performs unexpectedly, CITIC 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 CITIC will offset losses from the drop in CITIC's long position.| Swire Pacific vs. CITIC Limited | Swire Pacific vs. Fosun International | Swire Pacific vs. Cibl Inc | Swire Pacific vs. Jardine Matheson Holdings |
| CITIC vs. Molson Coors Brewing | CITIC vs. FTAI Aviation Ltd | CITIC vs. Ambev SA ADR | CITIC vs. China Aircraft Leasing |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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