Correlation Between Celestica and Matthews India

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

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

Diversification Opportunities for Celestica and Matthews India

0.56

Correlation Coefficient

Celestica  Matthews India

Very weak diversification

The 3 months correlation between Celestica and Matthews is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and Matthews India Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews India and Celestica 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 Celestica 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 Celestica i.e., Celestica and Matthews India go up and down completely randomly.

Pair Corralation between Celestica and Matthews India

Considering the 90-day investment horizon Celestica is expected to under-perform the Matthews India. In addition to that, Celestica is 4.84 times more volatile than Matthews India Fund. It trades about -0.07 of its total potential returns per unit of risk. Matthews India Fund is currently generating about 0.1 per unit of volatility. If you would invest  2,823  in Matthews India Fund on January 29, 2024 and sell it today you would earn a total of  36.00  from holding Matthews India Fund or generate 1.28% return on investment over 90 days.

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

Celestica  vs.  Matthews India Fund

Celestica

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Matthews India

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews India Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Matthews India is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Celestica and Matthews India

The main advantage of trading using opposite Celestica and Matthews India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica 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 Celestica 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.