Correlation Between Matthews Asia and Oberweis Micro

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

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

Diversification Opportunities for Matthews Asia and Oberweis Micro

-0.46

Correlation Coefficient

Matthews Asia  Oberweis Micro

Very good diversification

The 3 months correlation between Matthews and Oberweis is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Asia Small and Oberweis Micro Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberweis Micro Cap and Matthews Asia 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 Asia Small are associated (or correlated) with Oberweis Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberweis Micro Cap has no effect on the direction of Matthews Asia i.e., Matthews Asia and Oberweis Micro go up and down completely randomly.

Pair Corralation between Matthews Asia and Oberweis Micro

Assuming the 90 days horizon Matthews Asia Small is expected to under-perform the Oberweis Micro. But the mutual fund apears to be less risky and, when comparing its historical volatility, Matthews Asia Small is 1.37 times less risky than Oberweis Micro. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Oberweis Micro Cap Fund is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,223  in Oberweis Micro Cap Fund on September 2, 2024 and sell it today you would earn a total of  714.00  from holding Oberweis Micro Cap Fund or generate 16.91% return on investment over 90 days.

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

Matthews Asia Small  vs.  Oberweis Micro Cap Fund

Matthews Asia Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matthews Asia Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Matthews Asia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oberweis Micro Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oberweis Micro Cap Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Oberweis Micro showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matthews Asia and Oberweis Micro

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

The idea behind Matthews Asia Small and Oberweis Micro Cap Fund 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.