Correlation Between Matthews Asian and Commonwealth Australianew

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

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

Diversification Opportunities for Matthews Asian and Commonwealth Australianew

0.54

Correlation Coefficient

Matthews Asian  Commonwealth Australianew

Very weak diversification

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

Pair Corralation between Matthews Asian and Commonwealth Australianew

Assuming the 90 days horizon Matthews Asian Growth is expected to generate 1.21 times more return on investment than Commonwealth Australianew. However, Matthews Asian is 1.21 times more volatile than Commonwealth Australianew Zealand. It trades about 0.06 of its potential returns per unit of risk. Commonwealth Australianew Zealand is currently generating about -0.08 per unit of risk. If you would invest  1,321  in Matthews Asian Growth on September 12, 2024 and sell it today you would earn a total of  43.00  from holding Matthews Asian Growth or generate 3.26% return on investment over 90 days.

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

Matthews Asian Growth  vs.  Commonwealth Australianew Zeal

Matthews Asian Growth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews Asian Growth are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Matthews Asian is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Commonwealth Australianew

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Matthews Asian and Commonwealth Australianew

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

The idea behind Matthews Asian Growth and Commonwealth Australianew Zealand 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.

Check out your portfolio center.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.