Correlation Between KraneShares CSI and Rayliant Quantamental
Can any of the company-specific risk be diversified away by investing in both KraneShares CSI and Rayliant Quantamental 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 Rayliant Quantamental 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 Rayliant Quantamental China, you can compare the effects of market volatilities on KraneShares CSI and Rayliant Quantamental 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 Rayliant Quantamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares CSI and Rayliant Quantamental.
Diversification Opportunities for KraneShares CSI and Rayliant Quantamental
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KraneShares and Rayliant is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares CSI China and Rayliant Quantamental China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayliant Quantamental 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 Rayliant Quantamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rayliant Quantamental has no effect on the direction of KraneShares CSI i.e., KraneShares CSI and Rayliant Quantamental go up and down completely randomly.
Pair Corralation between KraneShares CSI and Rayliant Quantamental
Given the investment horizon of 90 days KraneShares CSI China is expected to generate 1.57 times more return on investment than Rayliant Quantamental. However, KraneShares CSI is 1.57 times more volatile than Rayliant Quantamental China. It trades about 0.28 of its potential returns per unit of risk. Rayliant Quantamental China is currently generating about 0.05 per unit of risk. If you would invest 2,924 in KraneShares CSI China on November 1, 2024 and sell it today you would earn a total of 322.00 from holding KraneShares CSI China or generate 11.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KraneShares CSI China vs. Rayliant Quantamental China
Performance |
| Timeline |
| KraneShares CSI China |
| Rayliant Quantamental |
KraneShares CSI and Rayliant Quantamental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares CSI and Rayliant Quantamental
The main advantage of trading using opposite KraneShares CSI and Rayliant Quantamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares CSI position performs unexpectedly, Rayliant Quantamental 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 Rayliant Quantamental will offset losses from the drop in Rayliant Quantamental'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 |
| Rayliant Quantamental vs. iShares MSCI China | Rayliant Quantamental vs. Franklin FTSE China | Rayliant Quantamental vs. Simplify Exchange Traded |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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