Correlation Between KraneShares and KBUY

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

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

Diversification Opportunities for KraneShares and KBUY

0.92

Correlation Coefficient

KraneShares  KBUY

Almost no diversification

The 3 months correlation between KraneShares and KBUY is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares and KBUY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBUY 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 KBUY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBUY has no effect on the direction of KraneShares i.e., KraneShares and KBUY go up and down completely randomly.

Pair Corralation between KraneShares and KBUY

If you would invest  1,728  in KBUY on September 19, 2024 and sell it today you would earn a total of  0.00  from holding KBUY 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.  KBUY

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.

KBUY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KBUY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, KBUY 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 KBUY

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

The idea behind KraneShares and KBUY 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.