Correlation Between Armada Hflr and KraneShares Asia

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

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

Diversification Opportunities for Armada Hflr and KraneShares Asia

-0.75

Correlation Coefficient

Armada Hflr  KraneShares Asia

Pay attention - limited upside

The 3 months correlation between Armada and KraneShares is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and KraneShares Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Asia Pacific and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with KraneShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Asia Pacific has no effect on the direction of Armada Hflr i.e., Armada Hflr and KraneShares Asia go up and down completely randomly.

Pair Corralation between Armada Hflr and KraneShares Asia

Considering the 90-day investment horizon Armada Hflr Pr is expected to generate 1.84 times more return on investment than KraneShares Asia. However, Armada Hflr is 1.84 times more volatile than KraneShares Asia Pacific. It trades about -0.04 of its potential returns per unit of risk. KraneShares Asia Pacific is currently generating about -0.15 per unit of risk. If you would invest  1,107  in Armada Hflr Pr on September 19, 2024 and sell it today you would lose (8.00) from holding Armada Hflr Pr or give up 0.72% of portfolio value over 90 days.

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

Armada Hflr Pr  vs.  KraneShares Asia Pacific

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

KraneShares Asia Pacific

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Asia Pacific are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KraneShares Asia is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and KraneShares Asia

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

The idea behind Armada Hflr Pr and KraneShares Asia Pacific 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.