Correlation Between Alphabet and Matthews Asia

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

By analyzing existing cross correlation between Alphabet Inc Class C and Matthews Asia Dividend, you can compare the effects of market volatilities on Alphabet and Matthews Asia 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 Alphabet with a short position of Matthews Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Matthews Asia.

Diversification Opportunities for Alphabet and Matthews Asia

-0.7

Correlation Coefficient

Alphabet  Matthews Asia

Excellent diversification

The 3 months correlation between Alphabet and Matthews is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Matthews Asia Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Asia Dividend and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Matthews Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Asia Dividend has no effect on the direction of Alphabet i.e., Alphabet and Matthews Asia go up and down completely randomly.

Pair Corralation between Alphabet and Matthews Asia

Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the Matthews Asia. In addition to that, Alphabet is 2.46 times more volatile than Matthews Asia Dividend. It trades about -0.16 of its total potential returns per unit of risk. Matthews Asia Dividend is currently generating about 0.04 per unit of volatility. If you would invest  1,412  in Matthews Asia Dividend on December 30, 2024 and sell it today you would earn a total of  24.00  from holding Matthews Asia Dividend or generate 1.7% return on investment over 90 days.

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

Alphabet Inc Class C  vs.  Matthews Asia Dividend

Alphabet Class C

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc Class C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Matthews Asia Dividend

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews Asia Dividend are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Matthews Asia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alphabet and Matthews Asia

The main advantage of trading using opposite Alphabet and Matthews Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Matthews Asia 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 Asia will offset losses from the drop in Matthews Asia's long position.

The idea behind Alphabet Inc Class C and Matthews Asia Dividend 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.