Correlation Between Xtrackers Harvest and Matthews China

Can any of the company-specific risk be diversified away by investing in both Xtrackers Harvest 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 Xtrackers Harvest and Matthews China into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xtrackers Harvest CSI and Matthews China Active, you can compare the effects of market volatilities on Xtrackers Harvest 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 Xtrackers Harvest with a short position of Matthews China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Harvest and Matthews China.

Diversification Opportunities for Xtrackers Harvest and Matthews China

0.7

Correlation Coefficient

Xtrackers Harvest  Matthews China

Poor diversification

The 3 months correlation between Xtrackers and Matthews is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Harvest CSI and Matthews China Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China Active and Xtrackers Harvest 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 Xtrackers Harvest CSI 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 Active has no effect on the direction of Xtrackers Harvest i.e., Xtrackers Harvest and Matthews China go up and down completely randomly.

Pair Corralation between Xtrackers Harvest and Matthews China

Given the investment horizon of 90 days Xtrackers Harvest CSI is expected to under-perform the Matthews China. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers Harvest CSI is 1.4 times less risky than Matthews China. The etf trades about -0.02 of its potential returns per unit of risk. The Matthews China Active is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,299  in Matthews China Active on December 11, 2024 and sell it today you would earn a total of  158.00  from holding Matthews China Active or generate 6.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Xtrackers Harvest CSI  vs.  Matthews China Active

Xtrackers Harvest CSI

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtrackers Harvest CSI has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Xtrackers Harvest is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Matthews China Active

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews China Active are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Matthews China may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Xtrackers Harvest and Matthews China

The main advantage of trading using opposite Xtrackers Harvest and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Harvest 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.

The idea behind Xtrackers Harvest CSI and Matthews China Active pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.