Correlation Between CHII and Global X

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

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

Diversification Opportunities for CHII and Global X

0.0

Correlation Coefficient

CHII  Global X

Pay attention - limited upside

The 3 months correlation between CHII and Global is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHII and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and CHII 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 CHII are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MSCI has no effect on the direction of CHII i.e., CHII and Global X go up and down completely randomly.

Pair Corralation between CHII and Global X

Given the investment horizon of 90 days CHII is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, CHII is 1.65 times less risky than Global X. The etf trades about -0.06 of its potential returns per unit of risk. The Global X MSCI is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,809  in Global X MSCI on October 27, 2024 and sell it today you would earn a total of  4,799  from holding Global X MSCI or generate 125.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	23.68%
Values	Daily Returns

CHII  vs.  Global X MSCI

CHII

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global X MSCI

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X MSCI are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Global X unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHII and Global X

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

The idea behind CHII and Global X MSCI 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.