Correlation Between CHIK and Global X

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

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

Diversification Opportunities for CHIK and Global X

-0.47

Correlation Coefficient

CHIK  Global X

Very good diversification

The 3 months correlation between CHIK and Global is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding CHIK 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 CHIK 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 CHIK 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 CHIK i.e., CHIK and Global X go up and down completely randomly.

Pair Corralation between CHIK and Global X

Given the investment horizon of 90 days CHIK is expected to generate 4.1 times less return on investment than Global X. But when comparing it to its historical volatility, CHIK is 1.43 times less risky than Global X. It trades about 0.0 of its potential returns per unit of risk. Global X MSCI is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,956  in Global X MSCI on September 20, 2024 and sell it today you would earn a total of  15.00  from holding Global X MSCI or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	28.48%
Values	Daily Returns

CHIK  vs.  Global X MSCI

CHIK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHIK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, CHIK is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Global X MSCI

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X MSCI are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Global X reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHIK and Global X

The main advantage of trading using opposite CHIK and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHIK 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 CHIK 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.