Correlation Between IShares China and CHII

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Can any of the company-specific risk be diversified away by investing in both IShares China and CHII 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 CHII into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares China Large Cap and CHII, you can compare the effects of market volatilities on IShares China and CHII 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 CHII. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and CHII.

Diversification Opportunities for IShares China and CHII

ISharesCHIIDiversified AwayISharesCHIIDiversified Away100%
0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between IShares and CHII is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares China Large Cap and CHII in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHII 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 Large Cap are associated (or correlated) with CHII. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHII has no effect on the direction of IShares China i.e., IShares China and CHII go up and down completely randomly.

Pair Corralation between IShares China and CHII

If you would invest  1,224  in CHII on October 13, 2024 and sell it today you would earn a total of  0.00  from holding CHII or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy1.61%
ValuesDaily Returns

iShares China Large Cap  vs.  CHII

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -10-50
JavaScript chart by amCharts 3.21.15FXI CHII
       Timeline  
iShares China Large 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days iShares China Large Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2930313233
CHII 

Risk-Adjusted Performance

0 of 100

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

IShares China and CHII Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.66-2.74-1.82-0.90.00.841.692.543.39 0.020.040.060.08
JavaScript chart by amCharts 3.21.15FXI CHII
       Returns  

Pair Trading with IShares China and CHII

The main advantage of trading using opposite IShares China and CHII positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, CHII 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 CHII will offset losses from the drop in CHII's long position.
The idea behind iShares China Large Cap and CHII 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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