Correlation Between Swire Properties and Elmos Semiconductor

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Can any of the company-specific risk be diversified away by investing in both Swire Properties and Elmos Semiconductor 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 Swire Properties and Elmos Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swire Properties Limited and Elmos Semiconductor SE, you can compare the effects of market volatilities on Swire Properties and Elmos Semiconductor 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 Swire Properties with a short position of Elmos Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swire Properties and Elmos Semiconductor.

Diversification Opportunities for Swire Properties and Elmos Semiconductor

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Swire and Elmos is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Swire Properties Limited and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor and Swire Properties 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 Swire Properties Limited are associated (or correlated) with Elmos Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elmos Semiconductor has no effect on the direction of Swire Properties i.e., Swire Properties and Elmos Semiconductor go up and down completely randomly.

Pair Corralation between Swire Properties and Elmos Semiconductor

Assuming the 90 days horizon Swire Properties Limited is expected to generate 0.91 times more return on investment than Elmos Semiconductor. However, Swire Properties Limited is 1.1 times less risky than Elmos Semiconductor. It trades about 0.04 of its potential returns per unit of risk. Elmos Semiconductor SE is currently generating about -0.02 per unit of risk. If you would invest  191.00  in Swire Properties Limited on December 27, 2024 and sell it today you would earn a total of  7.00  from holding Swire Properties Limited or generate 3.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Swire Properties Limited  vs.  Elmos Semiconductor SE

 Performance 
       Timeline  
Swire Properties 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Swire Properties Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Swire Properties is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
Elmos Semiconductor 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Elmos Semiconductor SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Elmos Semiconductor is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Swire Properties and Elmos Semiconductor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Swire Properties and Elmos Semiconductor

The main advantage of trading using opposite Swire Properties and Elmos Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swire Properties position performs unexpectedly, Elmos Semiconductor 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 Elmos Semiconductor will offset losses from the drop in Elmos Semiconductor's long position.
The idea behind Swire Properties Limited and Elmos Semiconductor SE 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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