Correlation Between KraneShares Asia and KraneShares

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

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

Diversification Opportunities for KraneShares Asia and KraneShares

-0.43

Correlation Coefficient

KraneShares Asia  KraneShares

Very good diversification

The 3 months correlation between KraneShares and KraneShares is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Asia Pacific and KraneShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares and KraneShares Asia 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 Asia Pacific 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 Asia i.e., KraneShares Asia and KraneShares go up and down completely randomly.

Pair Corralation between KraneShares Asia and KraneShares

Given the investment horizon of 90 days KraneShares Asia is expected to generate 1.19 times less return on investment than KraneShares. But when comparing it to its historical volatility, KraneShares Asia Pacific is 3.46 times less risky than KraneShares. It trades about 0.07 of its potential returns per unit of risk. KraneShares is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,594  in KraneShares on October 11, 2024 and sell it today you would earn a total of  216.00  from holding KraneShares or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.48%
Values	Daily Returns

KraneShares Asia Pacific  vs.  KraneShares

KraneShares Asia Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KraneShares Asia Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KraneShares Asia is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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. In spite of fairly stable forward indicators, KraneShares is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with KraneShares Asia and KraneShares

The main advantage of trading using opposite KraneShares Asia and KraneShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares Asia 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 Asia Pacific 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.