Correlation Between Swire Properties and Country Garden

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

Diversification Opportunities for Swire Properties and Country Garden

0.07

Correlation Coefficient

Swire Properties  Country Garden

Significant diversification

The 3 months correlation between Swire and Country is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Swire Properties Limited and Country Garden Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Garden Services 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 Country Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Garden Services has no effect on the direction of Swire Properties i.e., Swire Properties and Country Garden go up and down completely randomly.

Pair Corralation between Swire Properties and Country Garden

Assuming the 90 days horizon Swire Properties Limited is expected to generate 0.56 times more return on investment than Country Garden. However, Swire Properties Limited is 1.79 times less risky than Country Garden. It trades about 0.0 of its potential returns per unit of risk. Country Garden Services is currently generating about -0.02 per unit of risk. If you would invest  222.00  in Swire Properties Limited on January 19, 2024 and sell it today you would lose (30.50) from holding Swire Properties Limited or give up 13.74% of portfolio value over 90 days.

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

Swire Properties Limited  vs.  Country Garden Services

Swire Properties

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Swire Properties Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Swire Properties is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Country Garden Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Country Garden Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Country Garden is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Swire Properties and Country Garden

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

The idea behind Swire Properties Limited and Country Garden Services 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.