Correlation Between Matthews Pacific and Guinness Atkinson
Can any of the company-specific risk be diversified away by investing in both Matthews Pacific and Guinness Atkinson 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 Pacific and Guinness Atkinson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews Pacific Tiger and Guinness Atkinson Asia, you can compare the effects of market volatilities on Matthews Pacific and Guinness Atkinson 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 Pacific with a short position of Guinness Atkinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Pacific and Guinness Atkinson.
Diversification Opportunities for Matthews Pacific and Guinness Atkinson
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Matthews and Guinness is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Pacific Tiger and Guinness Atkinson Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson Asia and Matthews Pacific 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 Pacific Tiger are associated (or correlated) with Guinness Atkinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guinness Atkinson Asia has no effect on the direction of Matthews Pacific i.e., Matthews Pacific and Guinness Atkinson go up and down completely randomly.
Pair Corralation between Matthews Pacific and Guinness Atkinson
Assuming the 90 days horizon Matthews Pacific is expected to generate 1.99 times less return on investment than Guinness Atkinson. But when comparing it to its historical volatility, Matthews Pacific Tiger is 1.21 times less risky than Guinness Atkinson. It trades about 0.02 of its potential returns per unit of risk. Guinness Atkinson Asia is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,447 in Guinness Atkinson Asia on September 1, 2024 and sell it today you would earn a total of 49.00 from holding Guinness Atkinson Asia or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews Pacific Tiger vs. Guinness Atkinson Asia
Performance |
| Timeline |
| Matthews Pacific Tiger |
| Guinness Atkinson Asia |
Matthews Pacific and Guinness Atkinson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Pacific and Guinness Atkinson
The main advantage of trading using opposite Matthews Pacific and Guinness Atkinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Pacific position performs unexpectedly, Guinness Atkinson 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 Guinness Atkinson will offset losses from the drop in Guinness Atkinson's long position.| Matthews Pacific vs. Matthews Asia Growth | Matthews Pacific vs. Matthews Japan Fund | Matthews Pacific vs. Matthews China Fund |
| Guinness Atkinson vs. Guinness Atkinson China | Guinness Atkinson vs. Guinness Atkinson Global | Guinness Atkinson vs. Guinness Atkinson Global |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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