Correlation Between KraneShares ICBCCS and KraneShares CSI
Can any of the company-specific risk be diversified away by investing in both KraneShares ICBCCS and KraneShares CSI 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 ICBCCS and KraneShares CSI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares ICBCCS SP and KraneShares CSI China, you can compare the effects of market volatilities on KraneShares ICBCCS and KraneShares CSI 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 ICBCCS with a short position of KraneShares CSI. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares ICBCCS and KraneShares CSI.
Diversification Opportunities for KraneShares ICBCCS and KraneShares CSI
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KraneShares and KraneShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares ICBCCS SP and KraneShares CSI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares CSI China and KraneShares ICBCCS 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 ICBCCS SP are associated (or correlated) with KraneShares CSI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares CSI China has no effect on the direction of KraneShares ICBCCS i.e., KraneShares ICBCCS and KraneShares CSI go up and down completely randomly.
Pair Corralation between KraneShares ICBCCS and KraneShares CSI
Assuming the 90 days trading horizon KraneShares ICBCCS SP is expected to generate 0.88 times more return on investment than KraneShares CSI. However, KraneShares ICBCCS SP is 1.13 times less risky than KraneShares CSI. It trades about -0.04 of its potential returns per unit of risk. KraneShares CSI China is currently generating about -0.09 per unit of risk. If you would invest 94,785 in KraneShares ICBCCS SP on August 30, 2024 and sell it today you would lose (1,810) from holding KraneShares ICBCCS SP or give up 1.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares ICBCCS SP vs. KraneShares CSI China
Performance |
| Timeline |
| KraneShares ICBCCS |
| KraneShares CSI China |
KraneShares ICBCCS and KraneShares CSI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares ICBCCS and KraneShares CSI
The main advantage of trading using opposite KraneShares ICBCCS and KraneShares CSI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares ICBCCS position performs unexpectedly, KraneShares CSI 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 CSI will offset losses from the drop in KraneShares CSI's long position.| KraneShares ICBCCS vs. GraniteShares 3x Short | KraneShares ICBCCS vs. WisdomTree Natural Gas | KraneShares ICBCCS vs. Leverage Shares 3x | KraneShares ICBCCS vs. WisdomTree Natural Gas |
| KraneShares CSI vs. Leverage Shares 3x | KraneShares CSI vs. GraniteShares 3x Short | KraneShares CSI vs. WisdomTree Natural Gas | KraneShares CSI vs. Leverage Shares 3x |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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