Correlation Between Matthews China and Via Renewables

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

By analyzing existing cross correlation between Matthews China Fund and Via Renewables, you can compare the effects of market volatilities on Matthews China and Via Renewables 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 Via Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Via Renewables.

Diversification Opportunities for Matthews China and Via Renewables

0.83

Correlation Coefficient

Matthews China  Via Renewables

Very poor diversification

The 3 months correlation between Matthews and Via is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Fund and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables 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 Fund are associated (or correlated) with Via Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Via Renewables has no effect on the direction of Matthews China i.e., Matthews China and Via Renewables go up and down completely randomly.

Pair Corralation between Matthews China and Via Renewables

Assuming the 90 days horizon Matthews China Fund is expected to generate 2.41 times more return on investment than Via Renewables. However, Matthews China is 2.41 times more volatile than Via Renewables. It trades about 0.11 of its potential returns per unit of risk. Via Renewables is currently generating about 0.13 per unit of risk. If you would invest  1,349  in Matthews China Fund on December 29, 2024 and sell it today you would earn a total of  141.00  from holding Matthews China Fund or generate 10.45% return on investment over 90 days.

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

Matthews China Fund  vs.  Via Renewables

Matthews China

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews China Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Matthews China may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Via Renewables

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Via Renewables is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Matthews China and Via Renewables

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

The idea behind Matthews China Fund and Via Renewables 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.