Correlation Between Matthews China and Tremblant Global

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

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

Diversification Opportunities for Matthews China and Tremblant Global

-0.55

Correlation Coefficient

Matthews China  Tremblant Global

Excellent diversification

The 3 months correlation between Matthews and Tremblant is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and Tremblant Global ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tremblant Global 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 Discovery are associated (or correlated) with Tremblant Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tremblant Global ETF has no effect on the direction of Matthews China i.e., Matthews China and Tremblant Global go up and down completely randomly.

Pair Corralation between Matthews China and Tremblant Global

Given the investment horizon of 90 days Matthews China Discovery is expected to under-perform the Tremblant Global. In addition to that, Matthews China is 1.31 times more volatile than Tremblant Global ETF. It trades about -0.31 of its total potential returns per unit of risk. Tremblant Global ETF is currently generating about -0.26 per unit of volatility. If you would invest  3,183  in Tremblant Global ETF on October 10, 2024 and sell it today you would lose (172.00) from holding Tremblant Global ETF or give up 5.4% of portfolio value over 90 days.

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

Matthews China Discovery  vs.  Tremblant Global ETF

Matthews China Discovery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matthews China Discovery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Matthews China is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Tremblant Global ETF

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tremblant Global ETF are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Tremblant Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Matthews China and Tremblant Global

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

The idea behind Matthews China Discovery and Tremblant Global 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.