Correlation Between HP and KraneShares Asia
Can any of the company-specific risk be diversified away by investing in both HP and KraneShares Asia 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 HP and KraneShares Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and KraneShares Asia Pacific, you can compare the effects of market volatilities on HP and KraneShares Asia 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 HP with a short position of KraneShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and KraneShares Asia.
Diversification Opportunities for HP and KraneShares Asia
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HP and KraneShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and KraneShares Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Asia Pacific and HP 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 HP Inc are associated (or correlated) with KraneShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Asia Pacific has no effect on the direction of HP i.e., HP and KraneShares Asia go up and down completely randomly.
Pair Corralation between HP and KraneShares Asia
Considering the 90-day investment horizon HP Inc is expected to generate 9.24 times more return on investment than KraneShares Asia. However, HP is 9.24 times more volatile than KraneShares Asia Pacific. It trades about 0.05 of its potential returns per unit of risk. KraneShares Asia Pacific is currently generating about 0.23 per unit of risk. If you would invest 2,936 in HP Inc on September 4, 2024 and sell it today you would earn a total of 743.00 from holding HP Inc or generate 25.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. KraneShares Asia Pacific
Performance |
| Timeline |
| HP Inc |
| KraneShares Asia Pacific |
HP and KraneShares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and KraneShares Asia
The main advantage of trading using opposite HP and KraneShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, KraneShares Asia 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 Asia will offset losses from the drop in KraneShares Asia's long position.The idea behind HP Inc and KraneShares Asia Pacific 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.| KraneShares Asia vs. iShares iBoxx Investment | KraneShares Asia vs. iShares iBoxx High | KraneShares Asia vs. iShares National Muni | KraneShares Asia vs. Invesco Emerging Markets |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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