Correlation Between Swire Properties and COSTAR GROUP

Can any of the company-specific risk be diversified away by investing in both Swire Properties and COSTAR GROUP 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 COSTAR GROUP 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 COSTAR GROUP INC, you can compare the effects of market volatilities on Swire Properties and COSTAR GROUP 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 COSTAR GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swire Properties and COSTAR GROUP.

Diversification Opportunities for Swire Properties and COSTAR GROUP

0.12

Correlation Coefficient

Swire Properties  COSTAR GROUP

Average diversification

The 3 months correlation between Swire and COSTAR is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Swire Properties Limited and COSTAR GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTAR GROUP INC 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 COSTAR GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTAR GROUP INC has no effect on the direction of Swire Properties i.e., Swire Properties and COSTAR GROUP go up and down completely randomly.

Pair Corralation between Swire Properties and COSTAR GROUP

Assuming the 90 days horizon Swire Properties is expected to generate 1.3 times less return on investment than COSTAR GROUP. In addition to that, Swire Properties is 1.2 times more volatile than COSTAR GROUP INC. It trades about 0.03 of its total potential returns per unit of risk. COSTAR GROUP INC is currently generating about 0.05 per unit of volatility. If you would invest  6,898  in COSTAR GROUP INC on December 26, 2024 and sell it today you would earn a total of  319.00  from holding COSTAR GROUP INC or generate 4.62% return on investment over 90 days.

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

Swire Properties Limited  vs.  COSTAR GROUP INC

Swire Properties

Risk-Adjusted Performance

Weak

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

COSTAR GROUP INC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COSTAR GROUP INC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, COSTAR GROUP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Swire Properties and COSTAR GROUP

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

The idea behind Swire Properties Limited and COSTAR GROUP INC 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.