Correlation Between Bitcoin and Matthews China

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

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

Diversification Opportunities for Bitcoin and Matthews China

-0.69

Correlation Coefficient

Bitcoin  Matthews China

Excellent diversification

The 3 months correlation between Bitcoin and Matthews is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin 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 Bitcoin 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 Bitcoin 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 Bitcoin i.e., Bitcoin and Matthews China go up and down completely randomly.

Pair Corralation between Bitcoin and Matthews China

Assuming the 90 days trading horizon Bitcoin is expected to under-perform the Matthews China. In addition to that, Bitcoin is 1.47 times more volatile than Matthews China Active. It trades about -0.07 of its total potential returns per unit of risk. Matthews China Active is currently generating about 0.11 per unit of volatility. If you would invest  2,234  in Matthews China Active on December 21, 2024 and sell it today you would earn a total of  246.00  from holding Matthews China Active or generate 11.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Bitcoin  vs.  Matthews China Active

Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Bitcoin shareholders.

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 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Matthews China may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bitcoin and Matthews China

The main advantage of trading using opposite Bitcoin and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin 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 Bitcoin 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.