Correlation Between Matthews Pacific and Morgan Stanley

Can any of the company-specific risk be diversified away by investing in both Matthews Pacific and Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley India, you can compare the effects of market volatilities on Matthews Pacific and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Pacific and Morgan Stanley.

Diversification Opportunities for Matthews Pacific and Morgan Stanley

0.24

Correlation Coefficient

Matthews Pacific  Morgan Stanley

Modest diversification

The 3 months correlation between Matthews and Morgan is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Pacific Tiger and Morgan Stanley India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley India 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley India has no effect on the direction of Matthews Pacific i.e., Matthews Pacific and Morgan Stanley go up and down completely randomly.

Pair Corralation between Matthews Pacific and Morgan Stanley

Assuming the 90 days horizon Matthews Pacific Tiger is expected to generate 0.82 times more return on investment than Morgan Stanley. However, Matthews Pacific Tiger is 1.21 times less risky than Morgan Stanley. It trades about 0.04 of its potential returns per unit of risk. Morgan Stanley India is currently generating about -0.09 per unit of risk. If you would invest  1,926  in Matthews Pacific Tiger on September 15, 2024 and sell it today you would earn a total of  53.00  from holding Matthews Pacific Tiger or generate 2.75% return on investment over 90 days.

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

Matthews Pacific Tiger  vs.  Morgan Stanley India

Matthews Pacific Tiger

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews Pacific Tiger 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 Pacific is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 latest weak performance, the Fund's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the mutual fund stockholders.

Pair Trading with Matthews Pacific and Morgan Stanley

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

The idea behind Matthews Pacific Tiger and Morgan Stanley India 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.