Correlation Between Cibl and Swire Pacific

Can any of the company-specific risk be diversified away by investing in both Cibl and Swire Pacific 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 Cibl and Swire Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cibl Inc and Swire Pacific Ltd, you can compare the effects of market volatilities on Cibl and Swire Pacific 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 Cibl with a short position of Swire Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cibl and Swire Pacific.

Diversification Opportunities for Cibl and Swire Pacific

0.14

Correlation Coefficient

Cibl  Swire Pacific

Average diversification

The 3 months correlation between Cibl and Swire is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cibl Inc and Swire Pacific Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swire Pacific and Cibl 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 Cibl Inc are associated (or correlated) with Swire Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swire Pacific has no effect on the direction of Cibl i.e., Cibl and Swire Pacific go up and down completely randomly.

Pair Corralation between Cibl and Swire Pacific

Given the investment horizon of 90 days Cibl Inc is expected to under-perform the Swire Pacific. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cibl Inc is 2.23 times less risky than Swire Pacific. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Swire Pacific Ltd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  652.00  in Swire Pacific Ltd on September 1, 2024 and sell it today you would earn a total of  16.00  from holding Swire Pacific Ltd or generate 2.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.43%
Values	Daily Returns

Cibl Inc  vs.  Swire Pacific Ltd

Cibl Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cibl Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Cibl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Swire Pacific

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Swire Pacific Ltd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental drivers, Swire Pacific is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cibl and Swire Pacific

The main advantage of trading using opposite Cibl and Swire Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cibl position performs unexpectedly, Swire Pacific 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 Swire Pacific will offset losses from the drop in Swire Pacific's long position.

The idea behind Cibl Inc and Swire Pacific Ltd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.