Correlation Between Matthews Asia and Matthews China
Can any of the company-specific risk be diversified away by investing in both Matthews Asia and Matthews China 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 Asia and Matthews China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews Asia Growth and Matthews China Fund, you can compare the effects of market volatilities on Matthews Asia and Matthews China 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 Asia with a short position of Matthews China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Asia and Matthews China.
Diversification Opportunities for Matthews Asia and Matthews China
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Matthews and Matthews is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Asia Growth and Matthews China Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China and Matthews Asia 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 Asia Growth are associated (or correlated) with Matthews China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews China has no effect on the direction of Matthews Asia i.e., Matthews Asia and Matthews China go up and down completely randomly.
Pair Corralation between Matthews Asia and Matthews China
Assuming the 90 days horizon Matthews Asia is expected to generate 4.12 times less return on investment than Matthews China. But when comparing it to its historical volatility, Matthews Asia Growth is 1.08 times less risky than Matthews China. It trades about 0.04 of its potential returns per unit of risk. Matthews China Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,319 in Matthews China Fund on November 3, 2024 and sell it today you would earn a total of 50.00 from holding Matthews China Fund or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews Asia Growth vs. Matthews China Fund
Performance |
| Timeline |
| Matthews Asia Growth |
| Matthews China |
Matthews Asia and Matthews China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Asia and Matthews China
The main advantage of trading using opposite Matthews Asia and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Asia position performs unexpectedly, Matthews China 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 China will offset losses from the drop in Matthews China's long position.| Matthews Asia vs. Matthews Asia Innovators | Matthews Asia vs. Matthews Japan Fund | Matthews Asia vs. Matthews Pacific Tiger | Matthews Asia vs. Matthews Asian Growth |
| Matthews China vs. Matthews India Fund | Matthews China vs. Matthews Pacific Tiger | Matthews China vs. Matthews Asian Growth | Matthews China vs. Guinness Atkinson China |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |