Correlation Between KraneShares Electric and Amplify Lithium

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

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

Diversification Opportunities for KraneShares Electric and Amplify Lithium

0.06

Correlation Coefficient

KraneShares Electric  Amplify Lithium

Significant diversification

The 3 months correlation between KraneShares and Amplify is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Electric Vehicles and Amplify Lithium Battery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify Lithium Battery and KraneShares Electric 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 Electric Vehicles are associated (or correlated) with Amplify Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify Lithium Battery has no effect on the direction of KraneShares Electric i.e., KraneShares Electric and Amplify Lithium go up and down completely randomly.

Pair Corralation between KraneShares Electric and Amplify Lithium

Given the investment horizon of 90 days KraneShares Electric Vehicles is expected to generate 0.98 times more return on investment than Amplify Lithium. However, KraneShares Electric Vehicles is 1.02 times less risky than Amplify Lithium. It trades about 0.01 of its potential returns per unit of risk. Amplify Lithium Battery is currently generating about -0.03 per unit of risk. If you would invest  2,130  in KraneShares Electric Vehicles on December 30, 2024 and sell it today you would earn a total of  11.00  from holding KraneShares Electric Vehicles or generate 0.52% return on investment over 90 days.

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

KraneShares Electric Vehicles  vs.  Amplify Lithium Battery

KraneShares Electric

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Electric Vehicles are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, KraneShares Electric is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Amplify Lithium Battery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amplify Lithium Battery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Amplify Lithium is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KraneShares Electric and Amplify Lithium

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

The idea behind KraneShares Electric Vehicles and Amplify Lithium Battery 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.