Correlation Between KraneShares Bosera and KraneShares Emerging

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Can any of the company-specific risk be diversified away by investing in both KraneShares Bosera and KraneShares Emerging 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 Bosera and KraneShares Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares Bosera MSCI and KraneShares Emerging Markets, you can compare the effects of market volatilities on KraneShares Bosera and KraneShares Emerging 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 Bosera with a short position of KraneShares Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares Bosera and KraneShares Emerging.

Diversification Opportunities for KraneShares Bosera and KraneShares Emerging

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between KraneShares and KraneShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Bosera MSCI and KraneShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Emerging and KraneShares Bosera 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 Bosera MSCI are associated (or correlated) with KraneShares Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Emerging has no effect on the direction of KraneShares Bosera i.e., KraneShares Bosera and KraneShares Emerging go up and down completely randomly.

Pair Corralation between KraneShares Bosera and KraneShares Emerging

Considering the 90-day investment horizon KraneShares Bosera MSCI is expected to under-perform the KraneShares Emerging. In addition to that, KraneShares Bosera is 1.21 times more volatile than KraneShares Emerging Markets. It trades about -0.12 of its total potential returns per unit of risk. KraneShares Emerging Markets is currently generating about -0.12 per unit of volatility. If you would invest  1,802  in KraneShares Emerging Markets on August 25, 2024 and sell it today you would lose (89.00) from holding KraneShares Emerging Markets or give up 4.94% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

KraneShares Bosera MSCI  vs.  KraneShares Emerging Markets

 Performance 
       Timeline  
KraneShares Bosera MSCI 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Bosera MSCI are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, KraneShares Bosera may actually be approaching a critical reversion point that can send shares even higher in December 2024.
KraneShares Emerging 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Emerging Markets are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, KraneShares Emerging may actually be approaching a critical reversion point that can send shares even higher in December 2024.

KraneShares Bosera and KraneShares Emerging Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KraneShares Bosera and KraneShares Emerging

The main advantage of trading using opposite KraneShares Bosera and KraneShares Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares Bosera position performs unexpectedly, KraneShares Emerging 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 Emerging will offset losses from the drop in KraneShares Emerging's long position.
The idea behind KraneShares Bosera MSCI and KraneShares Emerging Markets 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.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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