Correlation Between Matthews Asian and Guinness Atkinson

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

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

Diversification Opportunities for Matthews Asian and Guinness Atkinson

0.97

Correlation Coefficient

Matthews Asian  Guinness Atkinson

Almost no diversification

The 3 months correlation between Matthews and Guinness is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Asian Growth and Guinness Atkinson Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson Asia and Matthews Asian 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 Matthews Asian Growth are associated (or correlated) with Guinness Atkinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guinness Atkinson Asia has no effect on the direction of Matthews Asian i.e., Matthews Asian and Guinness Atkinson go up and down completely randomly.

Pair Corralation between Matthews Asian and Guinness Atkinson

Assuming the 90 days horizon Matthews Asian Growth is expected to under-perform the Guinness Atkinson. But the mutual fund apears to be less risky and, when comparing its historical volatility, Matthews Asian Growth is 1.54 times less risky than Guinness Atkinson. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Guinness Atkinson Asia is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,519  in Guinness Atkinson Asia on September 2, 2024 and sell it today you would lose (23.00) from holding Guinness Atkinson Asia or give up 1.51% of portfolio value over 90 days.

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

Matthews Asian Growth  vs.  Guinness Atkinson Asia

Matthews Asian Growth

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews Asian Growth are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Matthews Asian is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guinness Atkinson Asia

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guinness Atkinson Asia are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Guinness Atkinson is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Matthews Asian and Guinness Atkinson

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

The idea behind Matthews Asian Growth and Guinness Atkinson Asia 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.