Correlation Between CHIX and CHII
Can any of the company-specific risk be diversified away by investing in both CHIX and CHII 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 CHIX and CHII into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHIX and CHII, you can compare the effects of market volatilities on CHIX and CHII 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 CHIX with a short position of CHII. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHIX and CHII.
Diversification Opportunities for CHIX and CHII
Very poor diversification
The 3 months correlation between CHIX and CHII is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding CHIX and CHII in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHII and CHIX 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 CHIX are associated (or correlated) with CHII. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHII has no effect on the direction of CHIX i.e., CHIX and CHII go up and down completely randomly.
Pair Corralation between CHIX and CHII
If you would invest 1,224 in CHII on August 27, 2024 and sell it today you would earn a total of 0.00 from holding CHII or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHIX vs. CHII
Performance |
| Timeline |
| CHIX |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CHII |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CHIX and CHII Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHIX and CHII
The main advantage of trading using opposite CHIX and CHII positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHIX position performs unexpectedly, CHII 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 CHII will offset losses from the drop in CHII's long position.The idea behind CHIX and CHII 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.| CHII vs. iShares MSCI Singapore | CHII vs. iShares MSCI Malaysia | CHII vs. iShares MSCI Australia | CHII vs. iShares MSCI South |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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