Correlation Between CBRE Group and Swire Properties

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

By analyzing existing cross correlation between CBRE Group Class and Swire Properties Limited, you can compare the effects of market volatilities on CBRE Group and Swire Properties 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 CBRE Group with a short position of Swire Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBRE Group and Swire Properties.

Diversification Opportunities for CBRE Group and Swire Properties

0.16

Correlation Coefficient

CBRE Group  Swire Properties

Average diversification

The 3 months correlation between CBRE and Swire is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding CBRE Group Class and Swire Properties Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swire Properties and CBRE Group 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 CBRE Group Class are associated (or correlated) with Swire Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swire Properties has no effect on the direction of CBRE Group i.e., CBRE Group and Swire Properties go up and down completely randomly.

Pair Corralation between CBRE Group and Swire Properties

Assuming the 90 days horizon CBRE Group Class is expected to under-perform the Swire Properties. But the stock apears to be less risky and, when comparing its historical volatility, CBRE Group Class is 1.42 times less risky than Swire Properties. The stock trades about -0.19 of its potential returns per unit of risk. The Swire Properties Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  184.00  in Swire Properties Limited on September 24, 2024 and sell it today you would earn a total of  4.00  from holding Swire Properties Limited or generate 2.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CBRE Group Class  vs.  Swire Properties Limited

CBRE Group Class

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CBRE Group Class are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CBRE Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Swire Properties

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Swire Properties Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Swire Properties reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CBRE Group and Swire Properties

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

The idea behind CBRE Group Class and Swire Properties Limited 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.