Correlation Between Service International and Matthews International

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

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

Diversification Opportunities for Service International and Matthews International

0.64

Correlation Coefficient

Service International  Matthews International

Poor diversification

The 3 months correlation between Service and Matthews is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Service International and Matthews International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews International and Service International 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 Service International are associated (or correlated) with Matthews International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews International has no effect on the direction of Service International i.e., Service International and Matthews International go up and down completely randomly.

Pair Corralation between Service International and Matthews International

Considering the 90-day investment horizon Service International is expected to under-perform the Matthews International. But the stock apears to be less risky and, when comparing its historical volatility, Service International is 2.16 times less risky than Matthews International. The stock trades about -0.03 of its potential returns per unit of risk. The Matthews International is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,029  in Matthews International on April 25, 2025 and sell it today you would earn a total of  448.00  from holding Matthews International or generate 22.08% return on investment over 90 days.

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

Service International  vs.  Matthews International

Service International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Service International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Service International is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Matthews International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Matthews International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Service International and Matthews International

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

The idea behind Service International and Matthews International 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.