Correlation Between KFA Value and KraneShares

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

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

Diversification Opportunities for KFA Value and KraneShares

0.0

Correlation Coefficient

KFA Value  KraneShares

Pay attention - limited upside

The 3 months correlation between KFA and KraneShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KFA Value Line and KraneShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares and KFA Value 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 KFA Value Line 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 KFA Value i.e., KFA Value and KraneShares go up and down completely randomly.

Pair Corralation between KFA Value and KraneShares

If you would invest (100.00) in KraneShares on December 29, 2024 and sell it today you would earn a total of  100.00  from holding KraneShares or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

KFA Value Line  vs.  KraneShares

KFA Value Line

Risk-Adjusted Performance

Very Weak

Over the last 90 days KFA Value Line has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, KFA Value is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

KraneShares

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KFA Value and KraneShares

The main advantage of trading using opposite KFA Value and KraneShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KFA Value 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 KFA Value Line 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.