Correlation Between Morgan Stanley and Matthews Pacific

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

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

Diversification Opportunities for Morgan Stanley and Matthews Pacific

0.35

Correlation Coefficient

Morgan Stanley  Matthews Pacific

Weak diversification

The 3 months correlation between Morgan and Matthews is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley India and Matthews Pacific Tiger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Pacific Tiger and Morgan Stanley 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 Morgan Stanley India are associated (or correlated) with Matthews Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Pacific Tiger has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Matthews Pacific go up and down completely randomly.

Pair Corralation between Morgan Stanley and Matthews Pacific

Considering the 90-day investment horizon Morgan Stanley India is expected to under-perform the Matthews Pacific. But the fund apears to be less risky and, when comparing its historical volatility, Morgan Stanley India is 1.05 times less risky than Matthews Pacific. The fund trades about -0.23 of its potential returns per unit of risk. The Matthews Pacific Tiger is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  1,779  in Matthews Pacific Tiger on October 20, 2024 and sell it today you would lose (25.00) from holding Matthews Pacific Tiger or give up 1.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Morgan Stanley India  vs.  Matthews Pacific Tiger

Morgan Stanley India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Stanley India has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable forward indicators, Morgan Stanley is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Matthews Pacific Tiger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matthews Pacific Tiger has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Morgan Stanley and Matthews Pacific

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

The idea behind Morgan Stanley India and Matthews Pacific Tiger 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.