Correlation Between Matthews Pacific and Guinness Atkinson

Can any of the company-specific risk be diversified away by investing in both Matthews Pacific 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 Pacific 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 Pacific Tiger and Guinness Atkinson China, you can compare the effects of market volatilities on Matthews Pacific 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 Pacific with a short position of Guinness Atkinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Pacific and Guinness Atkinson.

Diversification Opportunities for Matthews Pacific and Guinness Atkinson

0.78

Correlation Coefficient

Matthews Pacific  Guinness Atkinson

Poor diversification

The 3 months correlation between Matthews and Guinness is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Pacific Tiger and Guinness Atkinson China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson China and Matthews Pacific 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 Pacific Tiger 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 China has no effect on the direction of Matthews Pacific i.e., Matthews Pacific and Guinness Atkinson go up and down completely randomly.

Pair Corralation between Matthews Pacific and Guinness Atkinson

Assuming the 90 days horizon Matthews Pacific is expected to generate 6.27 times less return on investment than Guinness Atkinson. But when comparing it to its historical volatility, Matthews Pacific Tiger is 2.0 times less risky than Guinness Atkinson. It trades about 0.05 of its potential returns per unit of risk. Guinness Atkinson China is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,095  in Guinness Atkinson China on September 12, 2024 and sell it today you would earn a total of  286.00  from holding Guinness Atkinson China or generate 26.12% return on investment over 90 days.

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

Matthews Pacific Tiger  vs.  Guinness Atkinson China

Matthews Pacific Tiger

Risk-Adjusted Performance

4 of 100

Insignificant

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

Guinness Atkinson China

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guinness Atkinson China are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Guinness Atkinson showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matthews Pacific and Guinness Atkinson

The main advantage of trading using opposite Matthews Pacific and Guinness Atkinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Pacific 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 Pacific Tiger and Guinness Atkinson China 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 Transaction History module to view history of all your transactions and understand their impact on performance.