Correlation Between Matthews International and Halma Plc
Can any of the company-specific risk be diversified away by investing in both Matthews International and Halma Plc 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 International and Halma Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews International and Halma plc, you can compare the effects of market volatilities on Matthews International and Halma Plc 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 International with a short position of Halma Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews International and Halma Plc.
Diversification Opportunities for Matthews International and Halma Plc
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Matthews and Halma is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Matthews International and Halma plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halma plc and Matthews International 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 International are associated (or correlated) with Halma Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halma plc has no effect on the direction of Matthews International i.e., Matthews International and Halma Plc go up and down completely randomly.
Pair Corralation between Matthews International and Halma Plc
Given the investment horizon of 90 days Matthews International is expected to under-perform the Halma Plc. But the stock apears to be less risky and, when comparing its historical volatility, Matthews International is 1.03 times less risky than Halma Plc. The stock trades about -0.01 of its potential returns per unit of risk. The Halma plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,599 in Halma plc on November 2, 2024 and sell it today you would earn a total of 1,251 from holding Halma plc or generate 48.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.77% |
| Values | Daily Returns |
Matthews International vs. Halma plc
Performance |
| Timeline |
| Matthews International |
| Halma plc |
Matthews International and Halma Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews International and Halma Plc
The main advantage of trading using opposite Matthews International and Halma Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews International position performs unexpectedly, Halma Plc 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 Halma Plc will offset losses from the drop in Halma Plc's long position.| Matthews International vs. Steel Partners Holdings | Matthews International vs. Compass Diversified | Matthews International vs. Brookfield Business Partners | Matthews International vs. Tejon Ranch Co |
| Halma Plc vs. Griffon | Halma Plc vs. Brookfield Business Partners | Halma Plc vs. MDU Resources Group | Halma Plc vs. Matthews International |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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