Correlation Between KraneShares CSI and CHIS
Can any of the company-specific risk be diversified away by investing in both KraneShares CSI and CHIS 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 CHIS 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 CHIS, you can compare the effects of market volatilities on KraneShares CSI and CHIS 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 CHIS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares CSI and CHIS.
Diversification Opportunities for KraneShares CSI and CHIS
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KraneShares and CHIS is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares CSI China and CHIS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIS 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 CHIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIS has no effect on the direction of KraneShares CSI i.e., KraneShares CSI and CHIS go up and down completely randomly.
Pair Corralation between KraneShares CSI and CHIS
Given the investment horizon of 90 days KraneShares CSI China is expected to generate 1.77 times more return on investment than CHIS. However, KraneShares CSI is 1.77 times more volatile than CHIS. It trades about 0.01 of its potential returns per unit of risk. CHIS is currently generating about -0.05 per unit of risk. If you would invest 3,032 in KraneShares CSI China on September 3, 2024 and sell it today you would earn a total of 48.00 from holding KraneShares CSI China or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 30.91% |
| Values | Daily Returns |
KraneShares CSI China vs. CHIS
Performance |
| Timeline |
| KraneShares CSI China |
| CHIS |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
KraneShares CSI and CHIS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares CSI and CHIS
The main advantage of trading using opposite KraneShares CSI and CHIS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares CSI position performs unexpectedly, CHIS 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 CHIS will offset losses from the drop in CHIS's long position.| 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 |
| CHIS vs. Franklin FTSE South | CHIS vs. Franklin FTSE Japan | CHIS vs. Franklin FTSE India | CHIS vs. Franklin FTSE Brazil |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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