Correlation Between Swire Properties and WANDA HOTEL

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

Diversification Opportunities for Swire Properties and WANDA HOTEL

0.81

Correlation Coefficient

Swire Properties  WANDA HOTEL

Very poor diversification

The 3 months correlation between Swire and WANDA is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Swire Properties Limited and WANDA HOTEL DEVEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WANDA HOTEL DEVEL 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 WANDA HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WANDA HOTEL DEVEL has no effect on the direction of Swire Properties i.e., Swire Properties and WANDA HOTEL go up and down completely randomly.

Pair Corralation between Swire Properties and WANDA HOTEL

Assuming the 90 days horizon Swire Properties is expected to generate 2.42 times less return on investment than WANDA HOTEL. But when comparing it to its historical volatility, Swire Properties Limited is 2.34 times less risky than WANDA HOTEL. It trades about 0.15 of its potential returns per unit of risk. WANDA HOTEL DEVEL is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4.90  in WANDA HOTEL DEVEL on April 23, 2025 and sell it today you would earn a total of  2.35  from holding WANDA HOTEL DEVEL or generate 47.96% return on investment over 90 days.

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

Swire Properties Limited  vs.  WANDA HOTEL DEVEL

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.

WANDA HOTEL DEVEL

Risk-Adjusted Performance

Good

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

Pair Trading with Swire Properties and WANDA HOTEL

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

The idea behind Swire Properties Limited and WANDA HOTEL DEVEL 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .