Correlation Between KraneShares and KSET

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

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

Diversification Opportunities for KraneShares and KSET

0.87

Correlation Coefficient

KraneShares  KSET

Very poor diversification

The 3 months correlation between KraneShares and KSET is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares and KSET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSET 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 KSET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSET has no effect on the direction of KraneShares i.e., KraneShares and KSET go up and down completely randomly.

Pair Corralation between KraneShares and KSET

If you would invest  298.00  in KSET on September 14, 2024 and sell it today you would earn a total of  0.00  from holding KSET or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	11.11%
Values	Daily Returns

KraneShares  vs.  KSET

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 comparatively stable technical and fundamental indicators, KraneShares is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

KSET

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KSET has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, KSET is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KraneShares and KSET

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

The idea behind KraneShares and KSET 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.