Correlation Between Matthews China and JPMorgan Fundamental

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

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

Diversification Opportunities for Matthews China and JPMorgan Fundamental

0.43

Correlation Coefficient

Matthews China  JPMorgan Fundamental

Very weak diversification

The 3 months correlation between Matthews and JPMorgan is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and JPMorgan Fundamental Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Fundamental Data and Matthews 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 Matthews China Discovery are associated (or correlated) with JPMorgan Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Fundamental Data has no effect on the direction of Matthews China i.e., Matthews China and JPMorgan Fundamental go up and down completely randomly.

Pair Corralation between Matthews China and JPMorgan Fundamental

Given the investment horizon of 90 days Matthews China Discovery is expected to generate 3.91 times more return on investment than JPMorgan Fundamental. However, Matthews China is 3.91 times more volatile than JPMorgan Fundamental Data. It trades about 0.08 of its potential returns per unit of risk. JPMorgan Fundamental Data is currently generating about 0.25 per unit of risk. If you would invest  2,364  in Matthews China Discovery on September 4, 2024 and sell it today you would earn a total of  333.00  from holding Matthews China Discovery or generate 14.09% return on investment over 90 days.

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

Matthews China Discovery  vs.  JPMorgan Fundamental Data

Matthews China Discovery

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews China Discovery are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, Matthews China unveiled solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan Fundamental Data

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Fundamental Data are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, JPMorgan Fundamental may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Matthews China and JPMorgan Fundamental

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

The idea behind Matthews China Discovery and JPMorgan Fundamental Data 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.