Correlation Between Matthews China and Matthews Japan
Can any of the company-specific risk be diversified away by investing in both Matthews China and Matthews Japan 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 Japan 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 Japan Fund, you can compare the effects of market volatilities on Matthews China and Matthews Japan 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 Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Matthews Japan.
Diversification Opportunities for Matthews China and Matthews Japan
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between MATTHEWS and Matthews is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Fund and Matthews Japan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Japan 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 Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Japan has no effect on the direction of Matthews China i.e., Matthews China and Matthews Japan go up and down completely randomly.
Pair Corralation between Matthews China and Matthews Japan
Assuming the 90 days horizon Matthews China Fund is expected to under-perform the Matthews Japan. In addition to that, Matthews China is 1.58 times more volatile than Matthews Japan Fund. It trades about -0.01 of its total potential returns per unit of risk. Matthews Japan Fund is currently generating about 0.05 per unit of volatility. If you would invest 1,611 in Matthews Japan Fund on August 30, 2024 and sell it today you would earn a total of 423.00 from holding Matthews Japan Fund or generate 26.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Fund vs. Matthews Japan Fund
Performance |
| Timeline |
| Matthews China |
| Matthews Japan |
Matthews China and Matthews Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Matthews Japan
The main advantage of trading using opposite Matthews China and Matthews Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, Matthews Japan 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 Japan will offset losses from the drop in Matthews Japan'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 Japan vs. Matthews Asia Growth | Matthews Japan vs. Matthews Asia Innovators | Matthews Japan vs. Matthews Pacific Tiger | Matthews Japan vs. Matthews Asian Growth |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |