Correlation Between Matthews Pacific and Matthews Asia
Can any of the company-specific risk be diversified away by investing in both Matthews Pacific and Matthews Asia 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 Matthews Asia 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 Matthews Asia Growth, you can compare the effects of market volatilities on Matthews Pacific and Matthews Asia 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 Matthews Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Pacific and Matthews Asia.
Diversification Opportunities for Matthews Pacific and Matthews Asia
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Matthews and Matthews is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Pacific Tiger and Matthews Asia Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Asia Growth 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 Matthews Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Asia Growth has no effect on the direction of Matthews Pacific i.e., Matthews Pacific and Matthews Asia go up and down completely randomly.
Pair Corralation between Matthews Pacific and Matthews Asia
Assuming the 90 days horizon Matthews Pacific Tiger is expected to generate 0.95 times more return on investment than Matthews Asia. However, Matthews Pacific Tiger is 1.05 times less risky than Matthews Asia. It trades about 0.01 of its potential returns per unit of risk. Matthews Asia Growth is currently generating about 0.0 per unit of risk. If you would invest 1,771 in Matthews Pacific Tiger on December 29, 2024 and sell it today you would earn a total of 1.00 from holding Matthews Pacific Tiger or generate 0.06% 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. Matthews Asia Growth
Performance |
Timeline |
Matthews Pacific Tiger |
Matthews Asia Growth |
Matthews Pacific and Matthews Asia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Matthews Pacific and Matthews Asia
The main advantage of trading using opposite Matthews Pacific and Matthews Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Pacific position performs unexpectedly, Matthews Asia 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 Asia will offset losses from the drop in Matthews Asia's long position.The idea behind Matthews Pacific Tiger and Matthews Asia Growth 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.Matthews Asia vs. Matthews Asia Dividend | Matthews Asia vs. Matthews Pacific Tiger | Matthews Asia vs. Emerging Growth Fund | Matthews Asia vs. Matthews China Fund |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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