Correlation Between IShares China and CHIK

Can any of the company-specific risk be diversified away by investing in both IShares China and CHIK 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 CHIK 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 CHIK, you can compare the effects of market volatilities on IShares China and CHIK 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 CHIK. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and CHIK.

Diversification Opportunities for IShares China and CHIK

-0.49

Correlation Coefficient

IShares China  CHIK

Very good diversification

The 3 months correlation between IShares and CHIK is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding iShares China Large Cap and CHIK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIK 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 CHIK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIK has no effect on the direction of IShares China i.e., IShares China and CHIK go up and down completely randomly.

Pair Corralation between IShares China and CHIK

If you would invest  2,994  in iShares China Large Cap on September 20, 2024 and sell it today you would earn a total of  30.00  from holding iShares China Large Cap or generate 1.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

iShares China Large Cap  vs.  CHIK

iShares China Large

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares China Large Cap are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, IShares China demonstrated solid returns over the last few months and may actually be approaching a breakup point.

CHIK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHIK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, CHIK is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with IShares China and CHIK

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

The idea behind iShares China Large Cap and CHIK 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.