Correlation Between KraneShares CSI and KraneShares ICBCCS
Can any of the company-specific risk be diversified away by investing in both KraneShares CSI and KraneShares ICBCCS 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 CSI and KraneShares ICBCCS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares CSI China and KraneShares ICBCCS SP, you can compare the effects of market volatilities on KraneShares CSI and KraneShares ICBCCS 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 CSI with a short position of KraneShares ICBCCS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares CSI and KraneShares ICBCCS.
Diversification Opportunities for KraneShares CSI and KraneShares ICBCCS
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 CSI China and KraneShares ICBCCS SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares ICBCCS and KraneShares CSI 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 CSI China are associated (or correlated) with KraneShares ICBCCS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares ICBCCS has no effect on the direction of KraneShares CSI i.e., KraneShares CSI and KraneShares ICBCCS go up and down completely randomly.
Pair Corralation between KraneShares CSI and KraneShares ICBCCS
Assuming the 90 days trading horizon KraneShares CSI China is expected to under-perform the KraneShares ICBCCS. In addition to that, KraneShares CSI is 1.13 times more volatile than KraneShares ICBCCS SP. It trades about -0.09 of its total potential returns per unit of risk. KraneShares ICBCCS SP is currently generating about -0.04 per unit of volatility. If you would invest 94,785 in KraneShares ICBCCS SP on August 30, 2024 and sell it today you would lose (1,810) from holding KraneShares ICBCCS SP or give up 1.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares CSI China vs. KraneShares ICBCCS SP
Performance |
| Timeline |
| KraneShares CSI China |
| KraneShares ICBCCS |
KraneShares CSI and KraneShares ICBCCS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares CSI and KraneShares ICBCCS
The main advantage of trading using opposite KraneShares CSI and KraneShares ICBCCS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares CSI position performs unexpectedly, KraneShares ICBCCS 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 ICBCCS will offset losses from the drop in KraneShares ICBCCS's long position.| KraneShares CSI vs. Leverage Shares 3x | KraneShares CSI vs. GraniteShares 3x Short | KraneShares CSI vs. WisdomTree Natural Gas | KraneShares CSI vs. Leverage Shares 3x |
| KraneShares ICBCCS vs. GraniteShares 3x Short | KraneShares ICBCCS vs. WisdomTree Natural Gas | KraneShares ICBCCS vs. Leverage Shares 3x | KraneShares ICBCCS vs. WisdomTree Natural Gas |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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