Correlation Between Invesco China and KraneShares CSI
Can any of the company-specific risk be diversified away by investing in both Invesco China 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 Invesco China and KraneShares CSI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco China Technology and KraneShares CSI China, you can compare the effects of market volatilities on Invesco China 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 Invesco China with a short position of KraneShares CSI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco China and KraneShares CSI.
Diversification Opportunities for Invesco China and KraneShares CSI
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and KraneShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Invesco China Technology 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 Invesco China 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 Invesco China Technology 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 Invesco China i.e., Invesco China and KraneShares CSI go up and down completely randomly.
Pair Corralation between Invesco China and KraneShares CSI
Given the investment horizon of 90 days Invesco China Technology is expected to under-perform the KraneShares CSI. But the etf apears to be less risky and, when comparing its historical volatility, Invesco China Technology is 1.08 times less risky than KraneShares CSI. The etf trades about 0.0 of its potential returns per unit of risk. The KraneShares CSI China is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,109 in KraneShares CSI China on November 2, 2024 and sell it today you would earn a total of 137.00 from holding KraneShares CSI China or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco China Technology vs. KraneShares CSI China
Performance |
| Timeline |
| Invesco China Technology |
| KraneShares CSI China |
Invesco China and KraneShares CSI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco China and KraneShares CSI
The main advantage of trading using opposite Invesco China and KraneShares CSI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco China 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.| Invesco China vs. KraneShares CSI China | Invesco China vs. iShares MSCI China | Invesco China vs. Global X MSCI | Invesco China vs. Xtrackers Harvest CSI |
| KraneShares CSI vs. iShares MSCI China | KraneShares CSI vs. Invesco China Technology | KraneShares CSI vs. Xtrackers Harvest CSI | KraneShares CSI vs. iShares China Large Cap |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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