Correlation Between SPDR SP and KraneShares Bosera

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

By analyzing existing cross correlation between SPDR SP China and KraneShares Bosera MSCI, you can compare the effects of market volatilities on SPDR SP and KraneShares Bosera 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 Bosera. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and KraneShares Bosera.

Diversification Opportunities for SPDR SP and KraneShares Bosera

0.87

Correlation Coefficient

SPDR SP  KraneShares Bosera

Very poor diversification

The 3 months correlation between SPDR and KraneShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP China and KraneShares Bosera MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Bosera MSCI 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 China are associated (or correlated) with KraneShares Bosera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Bosera MSCI has no effect on the direction of SPDR SP i.e., SPDR SP and KraneShares Bosera go up and down completely randomly.

Pair Corralation between SPDR SP and KraneShares Bosera

Considering the 90-day investment horizon SPDR SP China is expected to generate 1.42 times more return on investment than KraneShares Bosera. However, SPDR SP is 1.42 times more volatile than KraneShares Bosera MSCI. It trades about 0.13 of its potential returns per unit of risk. KraneShares Bosera MSCI is currently generating about -0.01 per unit of risk. If you would invest  7,622  in SPDR SP China on December 29, 2024 and sell it today you would earn a total of  1,003  from holding SPDR SP China or generate 13.16% return on investment over 90 days.

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

SPDR SP China  vs.  KraneShares Bosera MSCI

SPDR SP China

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP China are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sluggish basic indicators, SPDR SP exhibited solid returns over the last few months and may actually be approaching a breakup point.

KraneShares Bosera MSCI

Risk-Adjusted Performance

Very Weak

Over the last 90 days KraneShares Bosera MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, KraneShares Bosera is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPDR SP and KraneShares Bosera

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

The idea behind SPDR SP China and KraneShares Bosera MSCI 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.