Correlation Between Alps/kotak India and Matthews India

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

By analyzing existing cross correlation between Alpskotak India Growth and Matthews India Fund, you can compare the effects of market volatilities on Alps/kotak India and Matthews India 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 Alps/kotak India with a short position of Matthews India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alps/kotak India and Matthews India.

Diversification Opportunities for Alps/kotak India and Matthews India

0.77

Correlation Coefficient

Alps/kotak India  Matthews India

Poor diversification

The 3 months correlation between Alps/kotak and Matthews is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Alpskotak India Growth and Matthews India Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews India and Alps/kotak India 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 Alpskotak India Growth are associated (or correlated) with Matthews India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews India has no effect on the direction of Alps/kotak India i.e., Alps/kotak India and Matthews India go up and down completely randomly.

Pair Corralation between Alps/kotak India and Matthews India

Assuming the 90 days horizon Alpskotak India Growth is expected to generate 0.86 times more return on investment than Matthews India. However, Alpskotak India Growth is 1.16 times less risky than Matthews India. It trades about -0.37 of its potential returns per unit of risk. Matthews India Fund is currently generating about -0.33 per unit of risk. If you would invest  1,766  in Alpskotak India Growth on October 24, 2024 and sell it today you would lose (118.00) from holding Alpskotak India Growth or give up 6.68% of portfolio value over 90 days.

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

Alpskotak India Growth  vs.  Matthews India Fund

Alpskotak India Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpskotak India Growth 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 forward 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.

Matthews India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matthews India Fund 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 Alps/kotak India and Matthews India

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

The idea behind Alpskotak India Growth and Matthews India Fund 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.