Correlation Between Sparta Capital and Matthews India

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

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

Diversification Opportunities for Sparta Capital and Matthews India

0.83

Correlation Coefficient

Sparta Capital  Matthews India

Very poor diversification

The 3 months correlation between Sparta and Matthews is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Matthews India Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews India and Sparta Capital 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 Sparta Capital are associated (or correlated) with Matthews India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews India has no effect on the direction of Sparta Capital i.e., Sparta Capital and Matthews India go up and down completely randomly.

Pair Corralation between Sparta Capital and Matthews India

Assuming the 90 days horizon Sparta Capital is expected to under-perform the Matthews India. In addition to that, Sparta Capital is 1.96 times more volatile than Matthews India Fund. It trades about -0.13 of its total potential returns per unit of risk. Matthews India Fund is currently generating about -0.23 per unit of volatility. If you would invest  2,998  in Matthews India Fund on December 1, 2024 and sell it today you would lose (763.00) from holding Matthews India Fund or give up 25.45% of portfolio value over 90 days.

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

Sparta Capital  vs.  Matthews India Fund

Sparta Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparta Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Matthews India

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Sparta Capital and Matthews India

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

The idea behind Sparta Capital and Matthews India 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.