Correlation Between Jardine Matheson and Swire Pacific

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

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

Diversification Opportunities for Jardine Matheson and Swire Pacific

0.47

Correlation Coefficient

Jardine Matheson  Swire Pacific

Very weak diversification

The 3 months correlation between Jardine and Swire is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Jardine Matheson Holdings and Swire Pacific Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swire Pacific and Jardine Matheson 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 Jardine Matheson Holdings 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 Jardine Matheson i.e., Jardine Matheson and Swire Pacific go up and down completely randomly.

Pair Corralation between Jardine Matheson and Swire Pacific

Assuming the 90 days horizon Jardine Matheson is expected to generate 115.38 times less return on investment than Swire Pacific. But when comparing it to its historical volatility, Jardine Matheson Holdings is 4.57 times less risky than Swire Pacific. It trades about 0.0 of its potential returns per unit of risk. Swire Pacific Ltd is currently generating about 0.05 of returns per unit of risk over similar time horizon. 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	Weak
Accuracy	94.57%
Values	Daily Returns

Jardine Matheson Holdings  vs.  Swire Pacific Ltd

Jardine Matheson Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jardine Matheson Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Jardine Matheson reported solid returns over the last few months and may actually be approaching a breakup point.

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 Jardine Matheson and Swire Pacific

The main advantage of trading using opposite Jardine Matheson and Swire Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jardine Matheson 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 Jardine Matheson Holdings 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.