Correlation Between Matthews Emerging and MAYBANK EMERGING

Can any of the company-specific risk be diversified away by investing in both Matthews Emerging 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 Emerging 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 Emerging Markets and MAYBANK EMERGING ETF, you can compare the effects of market volatilities on Matthews Emerging 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 Emerging with a short position of MAYBANK EMERGING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Emerging and MAYBANK EMERGING.

Diversification Opportunities for Matthews Emerging and MAYBANK EMERGING

0.9

Correlation Coefficient

Matthews Emerging  MAYBANK EMERGING

Almost no diversification

The 3 months correlation between Matthews and MAYBANK is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Emerging Markets 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 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 Matthews Emerging Markets 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 Emerging i.e., Matthews Emerging and MAYBANK EMERGING go up and down completely randomly.

Pair Corralation between Matthews Emerging and MAYBANK EMERGING

Given the investment horizon of 90 days Matthews Emerging Markets is expected to generate 0.8 times more return on investment than MAYBANK EMERGING. However, Matthews Emerging Markets is 1.25 times less risky than MAYBANK EMERGING. It trades about -0.05 of its potential returns per unit of risk. MAYBANK EMERGING ETF is currently generating about -0.08 per unit of risk. If you would invest  3,031  in Matthews Emerging Markets on October 24, 2024 and sell it today you would lose (64.00) from holding Matthews Emerging Markets or give up 2.11% of portfolio value over 90 days.

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

Matthews Emerging Markets  vs.  MAYBANK EMERGING ETF

Matthews Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matthews Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Matthews Emerging is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 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 Emerging and MAYBANK EMERGING

The main advantage of trading using opposite Matthews Emerging and MAYBANK EMERGING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Emerging 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 Emerging Markets 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.