Correlation Between Swire Pacific and Hitachi
Can any of the company-specific risk be diversified away by investing in both Swire Pacific and Hitachi 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 Hitachi 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 Hitachi Ltd ADR, you can compare the effects of market volatilities on Swire Pacific and Hitachi 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 Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swire Pacific and Hitachi.
Diversification Opportunities for Swire Pacific and Hitachi
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Swire and Hitachi is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Swire Pacific Ltd and Hitachi Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Ltd ADR 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 Hitachi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Ltd ADR has no effect on the direction of Swire Pacific i.e., Swire Pacific and Hitachi go up and down completely randomly.
Pair Corralation between Swire Pacific and Hitachi
Assuming the 90 days horizon Swire Pacific is expected to generate 2.12 times less return on investment than Hitachi. In addition to that, Swire Pacific is 1.09 times more volatile than Hitachi Ltd ADR. It trades about 0.05 of its total potential returns per unit of risk. Hitachi Ltd ADR is currently generating about 0.11 per unit of volatility. If you would invest 2,712 in Hitachi Ltd ADR on September 3, 2024 and sell it today you would earn a total of 2,316 from holding Hitachi Ltd ADR or generate 85.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 87.85% |
| Values | Daily Returns |
Swire Pacific Ltd vs. Hitachi Ltd ADR
Performance |
| Timeline |
| Swire Pacific |
| Hitachi Ltd ADR |
Swire Pacific and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swire Pacific and Hitachi
The main advantage of trading using opposite Swire Pacific and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swire Pacific position performs unexpectedly, Hitachi 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 Hitachi will offset losses from the drop in Hitachi's long position.| Swire Pacific vs. CITIC Limited | Swire Pacific vs. Fosun International | Swire Pacific vs. Cibl Inc | Swire Pacific vs. Jardine Matheson Holdings |
| Hitachi vs. Teijin | Hitachi vs. Jardine Matheson Holdings | Hitachi vs. Marubeni Corp ADR | Hitachi vs. Mitsubishi Corp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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