Correlation Between Matthews Asian and Matthews China
Can any of the company-specific risk be diversified away by investing in both Matthews Asian and Matthews China 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 Matthews Asian and Matthews China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews Asian Growth and Matthews China Fund, you can compare the effects of market volatilities on Matthews Asian and Matthews China 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 Matthews Asian with a short position of Matthews China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Asian and Matthews China.
Diversification Opportunities for Matthews Asian and Matthews China
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Matthews and Matthews is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Asian Growth and Matthews China Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China and Matthews Asian 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 Matthews Asian Growth are associated (or correlated) with Matthews China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews China has no effect on the direction of Matthews Asian i.e., Matthews Asian and Matthews China go up and down completely randomly.
Pair Corralation between Matthews Asian and Matthews China
Assuming the 90 days horizon Matthews Asian Growth is expected to generate 0.37 times more return on investment than Matthews China. However, Matthews Asian Growth is 2.7 times less risky than Matthews China. It trades about -0.19 of its potential returns per unit of risk. Matthews China Fund is currently generating about -0.16 per unit of risk. If you would invest 1,383 in Matthews Asian Growth on August 26, 2024 and sell it today you would lose (48.00) from holding Matthews Asian Growth or give up 3.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews Asian Growth vs. Matthews China Fund
Performance |
| Timeline |
| Matthews Asian Growth |
| Matthews China |
Matthews Asian and Matthews China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Asian and Matthews China
The main advantage of trading using opposite Matthews Asian and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Asian position performs unexpectedly, Matthews China 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 China will offset losses from the drop in Matthews China's long position.| Matthews Asian vs. Matthews Pacific Tiger | Matthews Asian vs. Matthews China Fund | Matthews Asian vs. Matthews Asia Dividend | Matthews Asian vs. Matthews Asia Growth |
| Matthews China vs. Matthews Pacific Tiger | Matthews China vs. Matthews India Fund | Matthews China vs. Matthews China Dividend | Matthews China 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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