Correlation Between Matthews China and Matthews India
Can any of the company-specific risk be diversified away by investing in both Matthews China and Matthews India 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 Matthews India 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 Matthews India Fund, you can compare the effects of market volatilities on Matthews China and Matthews India 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 Matthews India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Matthews India.
Diversification Opportunities for Matthews China and Matthews India
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MATTHEWS and Matthews is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Fund and Matthews India Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews India 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 Matthews India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews India has no effect on the direction of Matthews China i.e., Matthews China and Matthews India go up and down completely randomly.
Pair Corralation between Matthews China and Matthews India
Assuming the 90 days horizon Matthews China is expected to generate 3.25 times less return on investment than Matthews India. In addition to that, Matthews China is 2.09 times more volatile than Matthews India Fund. It trades about 0.01 of its total potential returns per unit of risk. Matthews India Fund is currently generating about 0.09 per unit of volatility. If you would invest 2,242 in Matthews India Fund on August 30, 2024 and sell it today you would earn a total of 752.00 from holding Matthews India Fund or generate 33.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Fund vs. Matthews India Fund
Performance |
| Timeline |
| Matthews China |
| Matthews India |
Matthews China and Matthews India Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Matthews India
The main advantage of trading using opposite Matthews China and Matthews India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, Matthews India 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 India will offset losses from the drop in Matthews India'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 |
| Matthews India vs. Matthews China Fund | Matthews India vs. Matthews Pacific Tiger | Matthews India vs. Eaton Vance Greater | Matthews India vs. Morgan Stanley India |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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