Correlation Between KraneShares MSCI and KraneShares

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

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

Diversification Opportunities for KraneShares MSCI and KraneShares

0.15

Correlation Coefficient

KraneShares MSCI  KraneShares

Average diversification

The 3 months correlation between KraneShares and KraneShares is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares MSCI China and KraneShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares 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 China are associated (or correlated) with KraneShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares has no effect on the direction of KraneShares MSCI i.e., KraneShares MSCI and KraneShares go up and down completely randomly.

Pair Corralation between KraneShares MSCI and KraneShares

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	Insignificant
Accuracy	4.76%
Values	Daily Returns

KraneShares MSCI China  vs.  KraneShares

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.

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. Despite nearly stable basic indicators, KraneShares is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KraneShares MSCI and KraneShares

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

The idea behind KraneShares MSCI China and KraneShares 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 Transaction History module to view history of all your transactions and understand their impact on performance.