Correlation Between KraneShares and ASHX

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

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

Diversification Opportunities for KraneShares and ASHX

0.96

Correlation Coefficient

KraneShares  ASHX

Almost no diversification

The 3 months correlation between KraneShares and ASHX is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares and ASHX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASHX and KraneShares 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 are associated (or correlated) with ASHX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASHX has no effect on the direction of KraneShares i.e., KraneShares and ASHX go up and down completely randomly.

Pair Corralation between KraneShares and ASHX

If you would invest  2,087  in ASHX on September 19, 2024 and sell it today you would earn a total of  0.00  from holding ASHX or generate 0.0% return on investment over 90 days.

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

KraneShares  vs.  ASHX

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.

ASHX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASHX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, ASHX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KraneShares and ASHX

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

The idea behind KraneShares and ASHX 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.