Correlation Between MAYBANK EMERGING and Matthews China

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

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

Diversification Opportunities for MAYBANK EMERGING and Matthews China

0.91

Correlation Coefficient

MAYBANK EMERGING  Matthews China

Almost no diversification

The 3 months correlation between MAYBANK and Matthews is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding MAYBANK EMERGING ETF and Matthews China Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China Active and MAYBANK EMERGING 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 MAYBANK EMERGING ETF are associated (or correlated) with Matthews China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews China Active has no effect on the direction of MAYBANK EMERGING i.e., MAYBANK EMERGING and Matthews China go up and down completely randomly.

Pair Corralation between MAYBANK EMERGING and Matthews China

Considering the 90-day investment horizon MAYBANK EMERGING ETF is expected to generate 0.42 times more return on investment than Matthews China. However, MAYBANK EMERGING ETF is 2.37 times less risky than Matthews China. It trades about -0.13 of its potential returns per unit of risk. Matthews China Active is currently generating about -0.1 per unit of risk. If you would invest  3,129  in MAYBANK EMERGING ETF on October 10, 2024 and sell it today you would lose (229.00) from holding MAYBANK EMERGING ETF or give up 7.32% of portfolio value over 90 days.

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

MAYBANK EMERGING ETF  vs.  Matthews China Active

MAYBANK EMERGING ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAYBANK EMERGING ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Matthews China Active

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matthews China Active has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Pair Trading with MAYBANK EMERGING and Matthews China

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

The idea behind MAYBANK EMERGING ETF and Matthews China Active 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.