Correlation Between Goldman Sachs and KraneShares

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

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

Diversification Opportunities for Goldman Sachs and KraneShares

0.71

Correlation Coefficient

Goldman Sachs  KraneShares

Poor diversification

The 3 months correlation between Goldman and KraneShares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and KraneShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares and Goldman Sachs 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 Goldman Sachs Future are associated (or correlated) with KraneShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and KraneShares go up and down completely randomly.

Pair Corralation between Goldman Sachs and KraneShares

Given the investment horizon of 90 days Goldman Sachs is expected to generate 1.08 times less return on investment than KraneShares. But when comparing it to its historical volatility, Goldman Sachs Future is 1.09 times less risky than KraneShares. It trades about 0.03 of its potential returns per unit of risk. KraneShares is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,230  in KraneShares on September 19, 2024 and sell it today you would earn a total of  70.00  from holding KraneShares or generate 3.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	28.69%
Values	Daily Returns

Goldman Sachs Future  vs.  KraneShares

Goldman Sachs Future

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Future has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

KraneShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KraneShares has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, KraneShares is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Goldman Sachs and KraneShares

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

The idea behind Goldman Sachs Future and KraneShares 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.