Correlation Between SPDR SP and KraneShares SSE

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

By analyzing existing cross correlation between SPDR SP Emerging and KraneShares SSE STAR, you can compare the effects of market volatilities on SPDR SP and KraneShares SSE 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 SPDR SP with a short position of KraneShares SSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and KraneShares SSE.

Diversification Opportunities for SPDR SP and KraneShares SSE

0.4

Correlation Coefficient

SPDR SP  KraneShares SSE

Very weak diversification

The 3 months correlation between SPDR and KraneShares is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Emerging and KraneShares SSE STAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares SSE STAR and SPDR SP 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 SPDR SP Emerging are associated (or correlated) with KraneShares SSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares SSE STAR has no effect on the direction of SPDR SP i.e., SPDR SP and KraneShares SSE go up and down completely randomly.

Pair Corralation between SPDR SP and KraneShares SSE

Considering the 90-day investment horizon SPDR SP is expected to generate 1.16 times less return on investment than KraneShares SSE. But when comparing it to its historical volatility, SPDR SP Emerging is 3.61 times less risky than KraneShares SSE. It trades about 0.08 of its potential returns per unit of risk. KraneShares SSE STAR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,246  in KraneShares SSE STAR on September 28, 2024 and sell it today you would earn a total of  97.00  from holding KraneShares SSE STAR or generate 7.78% return on investment over 90 days.

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

SPDR SP Emerging  vs.  KraneShares SSE STAR

SPDR SP Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SP Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, SPDR SP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KraneShares SSE STAR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares SSE STAR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, KraneShares SSE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR SP and KraneShares SSE

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

The idea behind SPDR SP Emerging and KraneShares SSE STAR 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.