Correlation Between Matthews India and Alpskotak India

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

By analyzing existing cross correlation between Matthews India Fund and Alpskotak India Growth, you can compare the effects of market volatilities on Matthews India and Alpskotak India 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 India with a short position of Alpskotak India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews India and Alpskotak India.

Diversification Opportunities for Matthews India and Alpskotak India

0.54

Correlation Coefficient

Matthews India  Alpskotak India

Very weak diversification

The 3 months correlation between Matthews and Alpskotak is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Matthews India Fund and Alpskotak India Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpskotak India Growth and Matthews India 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 India Fund are associated (or correlated) with Alpskotak India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpskotak India Growth has no effect on the direction of Matthews India i.e., Matthews India and Alpskotak India go up and down completely randomly.

Pair Corralation between Matthews India and Alpskotak India

Assuming the 90 days horizon Matthews India Fund is expected to generate 1.01 times more return on investment than Alpskotak India. However, Matthews India is 1.01 times more volatile than Alpskotak India Growth. It trades about 0.03 of its potential returns per unit of risk. Alpskotak India Growth is currently generating about 0.01 per unit of risk. If you would invest  2,184  in Matthews India Fund on October 9, 2024 and sell it today you would earn a total of  338.00  from holding Matthews India Fund or generate 15.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Matthews India Fund  vs.  Alpskotak India Growth

Matthews India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matthews India Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Alpskotak India Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpskotak India Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Matthews India and Alpskotak India

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

The idea behind Matthews India Fund and Alpskotak India Growth 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.