Correlation Between KraneShares Bosera and KraneShares MSCI

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

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

Diversification Opportunities for KraneShares Bosera and KraneShares MSCI

0.86

Correlation Coefficient

KraneShares Bosera  KraneShares MSCI

Very poor diversification

The 3 months correlation between KraneShares and KraneShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Bosera MSCI and KraneShares MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares MSCI China and KraneShares Bosera 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 Bosera MSCI are associated (or correlated) with KraneShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares MSCI China has no effect on the direction of KraneShares Bosera i.e., KraneShares Bosera and KraneShares MSCI go up and down completely randomly.

Pair Corralation between KraneShares Bosera and KraneShares MSCI

Considering the 90-day investment horizon KraneShares Bosera MSCI is expected to under-perform the KraneShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, KraneShares Bosera MSCI is 1.16 times less risky than KraneShares MSCI. The etf trades about -0.08 of its potential returns per unit of risk. The KraneShares MSCI China is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,266  in KraneShares MSCI China on September 19, 2024 and sell it today you would earn a total of  2.00  from holding KraneShares MSCI China or generate 0.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

KraneShares Bosera MSCI  vs.  KraneShares MSCI China

KraneShares Bosera MSCI

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Bosera MSCI are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, KraneShares Bosera sustained solid returns over the last few months and may actually be approaching a breakup point.

KraneShares MSCI China

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares MSCI China are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, KraneShares MSCI displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KraneShares Bosera and KraneShares MSCI

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

The idea behind KraneShares Bosera MSCI and KraneShares MSCI China 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.