Correlation Between MidCap Financial and Swire Properties

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

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

Diversification Opportunities for MidCap Financial and Swire Properties

0.45

Correlation Coefficient

MidCap Financial  Swire Properties

Very weak diversification

The 3 months correlation between MidCap and Swire is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and Swire Properties Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swire Properties and MidCap Financial 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 MidCap Financial Investment 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 MidCap Financial i.e., MidCap Financial and Swire Properties go up and down completely randomly.

Pair Corralation between MidCap Financial and Swire Properties

Assuming the 90 days trading horizon MidCap Financial Investment is expected to generate 0.67 times more return on investment than Swire Properties. However, MidCap Financial Investment is 1.5 times less risky than Swire Properties. It trades about 0.18 of its potential returns per unit of risk. Swire Properties Limited is currently generating about 0.09 per unit of risk. If you would invest  981.00  in MidCap Financial Investment on April 21, 2025 and sell it today you would earn a total of  159.00  from holding MidCap Financial Investment or generate 16.21% return on investment over 90 days.

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

MidCap Financial Investment  vs.  Swire Properties Limited

MidCap Financial Inv

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MidCap Financial Investment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MidCap Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Swire Properties

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Swire Properties Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Swire Properties may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with MidCap Financial and Swire Properties

The main advantage of trading using opposite MidCap Financial and Swire Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial 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 MidCap Financial Investment 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.