Correlation Between Sino Land and Swire Pacific

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

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

Diversification Opportunities for Sino Land and Swire Pacific

-0.26

Correlation Coefficient

Sino Land  Swire Pacific

Very good diversification

The 3 months correlation between Sino and Swire is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sino Land Co and Swire Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swire Pacific and Sino Land 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 Sino Land Co 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 Sino Land i.e., Sino Land and Swire Pacific go up and down completely randomly.

Pair Corralation between Sino Land and Swire Pacific

Assuming the 90 days horizon Sino Land is expected to generate 70.18 times less return on investment than Swire Pacific. In addition to that, Sino Land is 1.36 times more volatile than Swire Pacific. It trades about 0.0 of its total potential returns per unit of risk. Swire Pacific is currently generating about 0.17 per unit of volatility. If you would invest  803.00  in Swire Pacific on October 26, 2024 and sell it today you would earn a total of  88.00  from holding Swire Pacific or generate 10.96% return on investment over 90 days.

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

Sino Land Co  vs.  Swire Pacific

Sino Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sino Land Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sino Land 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

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Swire Pacific are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Swire Pacific may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sino Land and Swire Pacific

The main advantage of trading using opposite Sino Land and Swire Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino Land 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 Sino Land Co and Swire Pacific 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.