Correlation Between CHIU and IShares China

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

By analyzing existing cross correlation between CHIU and iShares China Large Cap, you can compare the effects of market volatilities on CHIU and IShares China 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 CHIU with a short position of IShares China. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHIU and IShares China.

Diversification Opportunities for CHIU and IShares China

0.42

Correlation Coefficient

CHIU  IShares China

Very weak diversification

The 3 months correlation between CHIU and IShares is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CHIU and iShares China Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China Large and CHIU 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 CHIU are associated (or correlated) with IShares China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares China Large has no effect on the direction of CHIU i.e., CHIU and IShares China go up and down completely randomly.

Pair Corralation between CHIU and IShares China

If you would invest  2,926  in iShares China Large Cap on September 26, 2024 and sell it today you would earn a total of  183.00  from holding iShares China Large Cap or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

CHIU  vs.  iShares China Large Cap

CHIU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHIU has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, CHIU is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

iShares China Large

Risk-Adjusted Performance

0 of 100

Insignificant

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

Pair Trading with CHIU and IShares China

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

The idea behind CHIU and iShares China Large Cap 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.