Correlation Between Matthews Pacific and Janus Asia

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

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

Diversification Opportunities for Matthews Pacific and Janus Asia

0.9

Correlation Coefficient

Matthews Pacific  Janus Asia

Almost no diversification

The 3 months correlation between Matthews and Janus is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Pacific Tiger and Janus Asia Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Asia Equity and Matthews Pacific 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 Pacific Tiger are associated (or correlated) with Janus Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Asia Equity has no effect on the direction of Matthews Pacific i.e., Matthews Pacific and Janus Asia go up and down completely randomly.

Pair Corralation between Matthews Pacific and Janus Asia

Assuming the 90 days horizon Matthews Pacific is expected to generate 3.2 times less return on investment than Janus Asia. But when comparing it to its historical volatility, Matthews Pacific Tiger is 1.02 times less risky than Janus Asia. It trades about 0.01 of its potential returns per unit of risk. Janus Asia Equity is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  932.00  in Janus Asia Equity on January 24, 2024 and sell it today you would earn a total of  14.00  from holding Janus Asia Equity or generate 1.5% return on investment over 90 days.

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

Matthews Pacific Tiger  vs.  Janus Asia Equity

Matthews Pacific Tiger

Risk-Adjusted Performance

0 of 100

Weak

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

Janus Asia Equity

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Asia Equity are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Janus Asia 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 Pacific and Janus Asia

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

The idea behind Matthews Pacific Tiger and Janus Asia Equity 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.