Correlation Between Swire Pacific and Fosun International
Can any of the company-specific risk be diversified away by investing in both Swire Pacific and Fosun International 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 Fosun International 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 Fosun International, you can compare the effects of market volatilities on Swire Pacific and Fosun International 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 Fosun International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swire Pacific and Fosun International.
Diversification Opportunities for Swire Pacific and Fosun International
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Swire and Fosun is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Swire Pacific Ltd and Fosun International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fosun International 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 Fosun International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fosun International has no effect on the direction of Swire Pacific i.e., Swire Pacific and Fosun International go up and down completely randomly.
Pair Corralation between Swire Pacific and Fosun International
Assuming the 90 days horizon Swire Pacific Ltd is expected to generate 2.01 times more return on investment than Fosun International. However, Swire Pacific is 2.01 times more volatile than Fosun International. It trades about 0.05 of its potential returns per unit of risk. Fosun International is currently generating about 0.0 per unit of risk. If you would invest 493.00 in Swire Pacific Ltd on September 3, 2024 and sell it today you would earn a total of 175.00 from holding Swire Pacific Ltd or generate 35.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 69.2% |
| Values | Daily Returns |
Swire Pacific Ltd vs. Fosun International
Performance |
| Timeline |
| Swire Pacific |
| Fosun International |
Swire Pacific and Fosun International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swire Pacific and Fosun International
The main advantage of trading using opposite Swire Pacific and Fosun International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swire Pacific position performs unexpectedly, Fosun International 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 Fosun International will offset losses from the drop in Fosun International's long position.| Swire Pacific vs. CITIC Limited | Swire Pacific vs. Fosun International | Swire Pacific vs. Cibl Inc | Swire Pacific vs. Jardine Matheson Holdings |
| Fosun International vs. Grupo Bimbo SAB | Fosun International vs. Grupo Financiero Inbursa | Fosun International vs. Becle SA de | Fosun International vs. HUMANA INC |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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