Correlation Between Matthews China and MAYBANK EMERGING

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

By analyzing existing cross correlation between Matthews China Active and MAYBANK EMERGING ETF, you can compare the effects of market volatilities on Matthews China and MAYBANK EMERGING 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 China with a short position of MAYBANK EMERGING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and MAYBANK EMERGING.

Diversification Opportunities for Matthews China and MAYBANK EMERGING

0.85

Correlation Coefficient

Matthews China  MAYBANK EMERGING

Very poor diversification

The 3 months correlation between Matthews and MAYBANK is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Active and MAYBANK EMERGING ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAYBANK EMERGING ETF and Matthews China 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 China Active are associated (or correlated) with MAYBANK EMERGING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAYBANK EMERGING ETF has no effect on the direction of Matthews China i.e., Matthews China and MAYBANK EMERGING go up and down completely randomly.

Pair Corralation between Matthews China and MAYBANK EMERGING

Considering the 90-day investment horizon Matthews China Active is expected to generate 1.46 times more return on investment than MAYBANK EMERGING. However, Matthews China is 1.46 times more volatile than MAYBANK EMERGING ETF. It trades about 0.17 of its potential returns per unit of risk. MAYBANK EMERGING ETF is currently generating about 0.06 per unit of risk. If you would invest  2,232  in Matthews China Active on December 20, 2024 and sell it today you would earn a total of  368.00  from holding Matthews China Active or generate 16.49% return on investment over 90 days.

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

Matthews China Active  vs.  MAYBANK EMERGING ETF

Matthews China Active

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews China Active are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Matthews China demonstrated solid returns over the last few months and may actually be approaching a breakup point.

MAYBANK EMERGING ETF

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MAYBANK EMERGING ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, MAYBANK EMERGING is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Matthews China and MAYBANK EMERGING

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

The idea behind Matthews China Active and MAYBANK EMERGING ETF 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 Stocks Directory module to find actively traded stocks across global markets.