Correlation Between Capri Holdings and KraneShares CSI

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

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

Diversification Opportunities for Capri Holdings and KraneShares CSI

-0.44

Correlation Coefficient

Capri Holdings  KraneShares CSI

Very good diversification

The 3 months correlation between Capri and KraneShares is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and KraneShares CSI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares CSI China and Capri Holdings 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 Capri Holdings are associated (or correlated) with KraneShares CSI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares CSI China has no effect on the direction of Capri Holdings i.e., Capri Holdings and KraneShares CSI go up and down completely randomly.

Pair Corralation between Capri Holdings and KraneShares CSI

Given the investment horizon of 90 days Capri Holdings is expected to generate 8.07 times less return on investment than KraneShares CSI. In addition to that, Capri Holdings is 1.41 times more volatile than KraneShares CSI China. It trades about 0.01 of its total potential returns per unit of risk. KraneShares CSI China is currently generating about 0.14 per unit of volatility. If you would invest  2,911  in KraneShares CSI China on December 30, 2024 and sell it today you would earn a total of  593.00  from holding KraneShares CSI China or generate 20.37% return on investment over 90 days.

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

Capri Holdings  vs.  KraneShares CSI China

Capri Holdings

Risk-Adjusted Performance

Very Weak

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

KraneShares CSI China

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares CSI China are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent technical and fundamental indicators, KraneShares CSI sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capri Holdings and KraneShares CSI

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

The idea behind Capri Holdings and KraneShares CSI China 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.