Correlation Between Century Pacific and Swift Foods

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

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

Diversification Opportunities for Century Pacific and Swift Foods

0.63

Correlation Coefficient

Century Pacific  Swift Foods

Poor diversification

The 3 months correlation between Century and Swift is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Century Pacific Food and Swift Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swift Foods and Century 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 Century Pacific Food are associated (or correlated) with Swift Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swift Foods has no effect on the direction of Century Pacific i.e., Century Pacific and Swift Foods go up and down completely randomly.

Pair Corralation between Century Pacific and Swift Foods

Assuming the 90 days trading horizon Century Pacific Food is expected to generate 0.68 times more return on investment than Swift Foods. However, Century Pacific Food is 1.47 times less risky than Swift Foods. It trades about -0.05 of its potential returns per unit of risk. Swift Foods is currently generating about -0.11 per unit of risk. If you would invest  4,141  in Century Pacific Food on December 30, 2024 and sell it today you would lose (381.00) from holding Century Pacific Food or give up 9.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	88.71%
Values	Daily Returns

Century Pacific Food  vs.  Swift Foods

Century Pacific Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Century Pacific Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Swift Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swift Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Century Pacific and Swift Foods

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

The idea behind Century Pacific Food and Swift Foods 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.