Correlation Between PSI Software and Swire Properties

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

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

Diversification Opportunities for PSI Software and Swire Properties

0.32

Correlation Coefficient

PSI Software  Swire Properties

Weak diversification

The 3 months correlation between PSI and Swire is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding PSI Software AG and Swire Properties Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swire Properties and PSI Software 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 PSI Software AG 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 PSI Software i.e., PSI Software and Swire Properties go up and down completely randomly.

Pair Corralation between PSI Software and Swire Properties

Assuming the 90 days trading horizon PSI Software is expected to generate 1.19 times less return on investment than Swire Properties. In addition to that, PSI Software is 1.08 times more volatile than Swire Properties Limited. It trades about 0.12 of its total potential returns per unit of risk. Swire Properties Limited is currently generating about 0.15 per unit of volatility. If you would invest  181.00  in Swire Properties Limited on April 23, 2025 and sell it today you would earn a total of  35.00  from holding Swire Properties Limited or generate 19.34% return on investment over 90 days.

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

PSI Software AG  vs.  Swire Properties Limited

PSI Software AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PSI Software AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, PSI Software exhibited solid returns over the last few months and may actually be approaching a breakup point.

Swire Properties

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swire Properties Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Swire Properties reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PSI Software and Swire Properties

The main advantage of trading using opposite PSI Software and Swire Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PSI Software 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 PSI Software AG 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.