Correlation Between IShares China and 21Shares Staking

Can any of the company-specific risk be diversified away by investing in both IShares China and 21Shares Staking 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 IShares China and 21Shares Staking into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares China CNY and 21Shares Staking Basket, you can compare the effects of market volatilities on IShares China and 21Shares Staking 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 IShares China with a short position of 21Shares Staking. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and 21Shares Staking.

Diversification Opportunities for IShares China and 21Shares Staking

0.09

Correlation Coefficient

IShares China  21Shares Staking

Significant diversification

The 3 months correlation between IShares and 21Shares is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding iShares China CNY and 21Shares Staking Basket in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21Shares Staking Basket and IShares China 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 iShares China CNY are associated (or correlated) with 21Shares Staking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21Shares Staking Basket has no effect on the direction of IShares China i.e., IShares China and 21Shares Staking go up and down completely randomly.

Pair Corralation between IShares China and 21Shares Staking

Assuming the 90 days trading horizon iShares China CNY is expected to generate 0.05 times more return on investment than 21Shares Staking. However, iShares China CNY is 19.14 times less risky than 21Shares Staking. It trades about -0.02 of its potential returns per unit of risk. 21Shares Staking Basket is currently generating about -0.14 per unit of risk. If you would invest  571.00  in iShares China CNY on December 23, 2024 and sell it today you would lose (2.00) from holding iShares China CNY or give up 0.35% of portfolio value over 90 days.

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

iShares China CNY  vs.  21Shares Staking Basket

iShares China CNY

Risk-Adjusted Performance

Very Weak

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

21Shares Staking Basket

Risk-Adjusted Performance

Very Weak

Over the last 90 days 21Shares Staking Basket has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with IShares China and 21Shares Staking

The main advantage of trading using opposite IShares China and 21Shares Staking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, 21Shares Staking 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 21Shares Staking will offset losses from the drop in 21Shares Staking's long position.

The idea behind iShares China CNY and 21Shares Staking Basket 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.