Correlation Between Matthews China and Guinness Atkinson
Can any of the company-specific risk be diversified away by investing in both Matthews China 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 China 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 China Fund and Guinness Atkinson China, you can compare the effects of market volatilities on Matthews China 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 China with a short position of Guinness Atkinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Guinness Atkinson.
Diversification Opportunities for Matthews China and Guinness Atkinson
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Matthews and Guinness is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Fund and Guinness Atkinson China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson China and Matthews China 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 China Fund 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 China has no effect on the direction of Matthews China i.e., Matthews China and Guinness Atkinson go up and down completely randomly.
Pair Corralation between Matthews China and Guinness Atkinson
Assuming the 90 days horizon Matthews China Fund is expected to under-perform the Guinness Atkinson. In addition to that, Matthews China is 1.55 times more volatile than Guinness Atkinson China. It trades about -0.16 of its total potential returns per unit of risk. Guinness Atkinson China is currently generating about -0.23 per unit of volatility. If you would invest 1,366 in Guinness Atkinson China on August 26, 2024 and sell it today you would lose (98.00) from holding Guinness Atkinson China or give up 7.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Fund vs. Guinness Atkinson China
Performance |
| Timeline |
| Matthews China |
| Guinness Atkinson China |
Matthews China and Guinness Atkinson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Guinness Atkinson
The main advantage of trading using opposite Matthews China and Guinness Atkinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China 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 China vs. Matthews India Fund | Matthews China vs. Matthews Pacific Tiger | Matthews China vs. Matthews Asian Growth | Matthews China vs. Guinness Atkinson China |
| Guinness Atkinson vs. Guinness Atkinson Asia | Guinness Atkinson vs. Matthews China Fund | Guinness Atkinson vs. Columbia Greater China | Guinness Atkinson vs. Eaton Vance Greater |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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