Correlation Between Apple and Matthews Asian
Can any of the company-specific risk be diversified away by investing in both Apple and Matthews Asian 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 Apple and Matthews Asian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Matthews Asian Growth, you can compare the effects of market volatilities on Apple and Matthews Asian 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 Apple with a short position of Matthews Asian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Matthews Asian.
Diversification Opportunities for Apple and Matthews Asian
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Apple and Matthews is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Matthews Asian Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Asian Growth and Apple 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 Apple Inc are associated (or correlated) with Matthews Asian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Asian Growth has no effect on the direction of Apple i.e., Apple and Matthews Asian go up and down completely randomly.
Pair Corralation between Apple and Matthews Asian
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Matthews Asian. In addition to that, Apple is 2.44 times more volatile than Matthews Asian Growth. It trades about -0.08 of its total potential returns per unit of risk. Matthews Asian Growth is currently generating about 0.0 per unit of volatility. If you would invest 1,331 in Matthews Asian Growth on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Matthews Asian Growth or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Matthews Asian Growth
Performance |
| Timeline |
| Apple Inc |
| Matthews Asian Growth |
Apple and Matthews Asian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Matthews Asian
The main advantage of trading using opposite Apple and Matthews Asian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Matthews Asian 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 Matthews Asian will offset losses from the drop in Matthews Asian's long position.The idea behind Apple Inc and Matthews Asian Growth 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.| Matthews Asian vs. Matthews Pacific Tiger | Matthews Asian vs. Matthews China Fund | Matthews Asian vs. Matthews Asia Dividend | Matthews Asian vs. Matthews Asia Growth |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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