Correlation Between KraneShares MSCI and KraneShares Bosera

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

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

Diversification Opportunities for KraneShares MSCI and KraneShares Bosera

0.65

Correlation Coefficient

KraneShares MSCI  KraneShares Bosera

Poor diversification

The 3 months correlation between KraneShares and KraneShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares MSCI All 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 KraneShares MSCI 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 KraneShares MSCI All 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 KraneShares MSCI i.e., KraneShares MSCI and KraneShares Bosera go up and down completely randomly.

Pair Corralation between KraneShares MSCI and KraneShares Bosera

Given the investment horizon of 90 days KraneShares MSCI All is expected to generate 1.08 times more return on investment than KraneShares Bosera. However, KraneShares MSCI is 1.08 times more volatile than KraneShares Bosera MSCI. It trades about 0.02 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  1,888  in KraneShares MSCI All on October 4, 2024 and sell it today you would earn a total of  118.00  from holding KraneShares MSCI All or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.7%
Values	Daily Returns

KraneShares MSCI All  vs.  KraneShares Bosera MSCI

KraneShares MSCI All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KraneShares MSCI All has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

KraneShares Bosera MSCI

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Etf's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with KraneShares MSCI and KraneShares Bosera

The main advantage of trading using opposite KraneShares MSCI and KraneShares Bosera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares MSCI 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 KraneShares MSCI All 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 Global Correlations module to find global opportunities by holding instruments from different markets.