Correlation Between Matthews India and Golden Heaven

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

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

Diversification Opportunities for Matthews India and Golden Heaven

-0.11

Correlation Coefficient

Matthews India  Golden Heaven

Good diversification

The 3 months correlation between Matthews and Golden is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Matthews India Fund and Golden Heaven Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Heaven Group and Matthews India 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 India Fund are associated (or correlated) with Golden Heaven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Heaven Group has no effect on the direction of Matthews India i.e., Matthews India and Golden Heaven go up and down completely randomly.

Pair Corralation between Matthews India and Golden Heaven

Assuming the 90 days horizon Matthews India Fund is expected to generate 0.11 times more return on investment than Golden Heaven. However, Matthews India Fund is 9.3 times less risky than Golden Heaven. It trades about 0.02 of its potential returns per unit of risk. Golden Heaven Group is currently generating about -0.04 per unit of risk. If you would invest  2,301  in Matthews India Fund on February 8, 2025 and sell it today you would earn a total of  172.00  from holding Matthews India Fund or generate 7.48% return on investment over 90 days.

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

Matthews India Fund  vs.  Golden Heaven Group

Matthews India

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews India Fund are ranked lower than 1 (%) 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.

Golden Heaven Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Heaven Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Golden Heaven reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matthews India and Golden Heaven

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

The idea behind Matthews India Fund and Golden Heaven Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.