Correlation Between Oberweis China and Matthews China

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

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

Diversification Opportunities for Oberweis China and Matthews China

0.99

Correlation Coefficient

Oberweis China  Matthews China

No risk reduction

The 3 months correlation between Oberweis and Matthews is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Oberweis China Opportunities and Matthews China Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China and Oberweis 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 Oberweis China Opportunities 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 has no effect on the direction of Oberweis China i.e., Oberweis China and Matthews China go up and down completely randomly.

Pair Corralation between Oberweis China and Matthews China

Assuming the 90 days horizon Oberweis China Opportunities is expected to generate 1.26 times more return on investment than Matthews China. However, Oberweis China is 1.26 times more volatile than Matthews China Fund. It trades about 0.12 of its potential returns per unit of risk. Matthews China Fund is currently generating about 0.11 per unit of risk. If you would invest  685.00  in Oberweis China Opportunities on December 30, 2024 and sell it today you would earn a total of  104.00  from holding Oberweis China Opportunities or generate 15.18% return on investment over 90 days.

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

Oberweis China Opportunities  vs.  Matthews China Fund

Oberweis China Oppor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oberweis China Opportunities are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Oberweis China showed solid returns over the last few months and may actually be approaching a breakup point.

Matthews China

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews China Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Matthews China may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Oberweis China and Matthews China

The main advantage of trading using opposite Oberweis China and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oberweis China 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 Oberweis China Opportunities and Matthews China 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.