Correlation Between ProShares Trust and KraneShares SSE

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

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

Diversification Opportunities for ProShares Trust and KraneShares SSE

-0.31

Correlation Coefficient

ProShares Trust  KraneShares SSE

Very good diversification

The 3 months correlation between ProShares and KraneShares is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and KraneShares SSE STAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares SSE STAR and ProShares Trust 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 ProShares Trust are associated (or correlated) with KraneShares SSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares SSE STAR has no effect on the direction of ProShares Trust i.e., ProShares Trust and KraneShares SSE go up and down completely randomly.

Pair Corralation between ProShares Trust and KraneShares SSE

Given the investment horizon of 90 days ProShares Trust is expected to under-perform the KraneShares SSE. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Trust is 2.04 times less risky than KraneShares SSE. The etf trades about -0.22 of its potential returns per unit of risk. The KraneShares SSE STAR is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  941.00  in KraneShares SSE STAR on September 19, 2024 and sell it today you would earn a total of  366.00  from holding KraneShares SSE STAR or generate 38.89% return on investment over 90 days.

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

ProShares Trust   vs.  KraneShares SSE STAR

ProShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

KraneShares SSE STAR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares SSE STAR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, KraneShares SSE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Trust and KraneShares SSE

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

The idea behind ProShares Trust and KraneShares SSE STAR 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.