Correlation Between KraneShares MSCI and KraneShares CSI
Can any of the company-specific risk be diversified away by investing in both KraneShares MSCI 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 MSCI 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 MSCI China and KraneShares CSI China, you can compare the effects of market volatilities on KraneShares MSCI 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 MSCI with a short position of KraneShares CSI. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares MSCI and KraneShares CSI.
Diversification Opportunities for KraneShares MSCI 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 MSCI China 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 MSCI 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 MSCI China 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 MSCI i.e., KraneShares MSCI and KraneShares CSI go up and down completely randomly.
Pair Corralation between KraneShares MSCI and KraneShares CSI
Assuming the 90 days trading horizon KraneShares MSCI China is expected to under-perform the KraneShares CSI. But the etf apears to be less risky and, when comparing its historical volatility, KraneShares MSCI China is 1.11 times less risky than KraneShares CSI. The etf trades about -0.11 of its potential returns per unit of risk. The KraneShares CSI China is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,362 in KraneShares CSI China on August 30, 2024 and sell it today you would lose (59.00) from holding KraneShares CSI China or give up 4.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares MSCI China vs. KraneShares CSI China
Performance |
| Timeline |
| KraneShares MSCI China |
| KraneShares CSI China |
KraneShares MSCI and KraneShares CSI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares MSCI and KraneShares CSI
The main advantage of trading using opposite KraneShares MSCI and KraneShares CSI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares MSCI 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 MSCI vs. Scottish Mortgage Investment | KraneShares MSCI vs. VinaCapital Vietnam Opportunity | KraneShares MSCI vs. Edinburgh Worldwide Investment | KraneShares MSCI vs. Baillie Gifford Growth |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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