Correlation Between Matthews Pacific and Matthews Asia
Can any of the company-specific risk be diversified away by investing in both Matthews Pacific and Matthews Asia 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 Matthews Asia 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 Matthews Asia Esg, you can compare the effects of market volatilities on Matthews Pacific and Matthews Asia 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 Matthews Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Pacific and Matthews Asia.
Diversification Opportunities for Matthews Pacific and Matthews Asia
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Matthews and Matthews is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Pacific Tiger and Matthews Asia Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Asia Esg 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 Matthews Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Asia Esg has no effect on the direction of Matthews Pacific i.e., Matthews Pacific and Matthews Asia go up and down completely randomly.
Pair Corralation between Matthews Pacific and Matthews Asia
Assuming the 90 days horizon Matthews Pacific is expected to generate 1.06 times less return on investment than Matthews Asia. But when comparing it to its historical volatility, Matthews Pacific Tiger is 1.04 times less risky than Matthews Asia. It trades about 0.19 of its potential returns per unit of risk. Matthews Asia Esg is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,189 in Matthews Asia Esg on November 28, 2024 and sell it today you would earn a total of 45.00 from holding Matthews Asia Esg or generate 3.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews Pacific Tiger vs. Matthews Asia Esg
Performance |
| Timeline |
| Matthews Pacific Tiger |
| Matthews Asia Esg |
Matthews Pacific and Matthews Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Pacific and Matthews Asia
The main advantage of trading using opposite Matthews Pacific and Matthews Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Pacific position performs unexpectedly, Matthews Asia 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 Asia will offset losses from the drop in Matthews Asia's long position.| Matthews Pacific vs. Matthews Asian Growth | Matthews Pacific vs. Matthews China Fund | Matthews Pacific vs. Matthews India Fund | Matthews Pacific vs. Matthews Asia Growth |
| Matthews Asia vs. Matthews Asia Small | Matthews Asia vs. Matthews China Small | Matthews Asia vs. Matthews Asia Growth | Matthews Asia vs. Matthews Asia Innovators |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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