Correlation Between KraneShares Global and KSET

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

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

Diversification Opportunities for KraneShares Global and KSET

-0.25

Correlation Coefficient

KraneShares Global  KSET

Very good diversification

The 3 months correlation between KraneShares and KSET is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Global Carbon and KSET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSET and KraneShares Global 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 Global Carbon 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 Global i.e., KraneShares Global and KSET go up and down completely randomly.

Pair Corralation between KraneShares Global and KSET

If you would invest  2,817  in KraneShares Global Carbon on October 10, 2024 and sell it today you would earn a total of  37.00  from holding KraneShares Global Carbon or generate 1.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

KraneShares Global Carbon  vs.  KSET

KraneShares Global Carbon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KraneShares Global Carbon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, KraneShares Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KraneShares Global and KSET

The main advantage of trading using opposite KraneShares Global and KSET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares Global 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 Global Carbon 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.