Correlation Between Global X and KraneShares Bosera

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

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

Diversification Opportunities for Global X and KraneShares Bosera

0.86

Correlation Coefficient

Global X  KraneShares Bosera

Very poor diversification

The 3 months correlation between Global and KraneShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Global X MSCI and KraneShares Bosera MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Bosera MSCI and Global X 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 Global X MSCI are associated (or correlated) with KraneShares Bosera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Bosera MSCI has no effect on the direction of Global X i.e., Global X and KraneShares Bosera go up and down completely randomly.

Pair Corralation between Global X and KraneShares Bosera

Given the investment horizon of 90 days Global X MSCI is expected to generate 1.86 times more return on investment than KraneShares Bosera. However, Global X is 1.86 times more volatile than KraneShares Bosera MSCI. It trades about 0.14 of its potential returns per unit of risk. KraneShares Bosera MSCI is currently generating about -0.01 per unit of risk. If you would invest  1,902  in Global X MSCI on December 30, 2024 and sell it today you would earn a total of  334.00  from holding Global X MSCI or generate 17.56% return on investment over 90 days.

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

Global X MSCI  vs.  KraneShares Bosera MSCI

Global X MSCI

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X MSCI are ranked lower than 10 (%) 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.

KraneShares Bosera MSCI

Risk-Adjusted Performance

Very Weak

Over the last 90 days KraneShares Bosera MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, KraneShares Bosera is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global X and KraneShares Bosera

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

The idea behind Global X MSCI and KraneShares Bosera 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.