Correlation Between Matthews China and KraneShares CSI
Can any of the company-specific risk be diversified away by investing in both Matthews China 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 Matthews China and KraneShares CSI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews China Discovery and KraneShares CSI China, you can compare the effects of market volatilities on Matthews China 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 Matthews China with a short position of KraneShares CSI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and KraneShares CSI.
Diversification Opportunities for Matthews China and KraneShares CSI
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Matthews and KraneShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery 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 Matthews China 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 Matthews China Discovery 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 Matthews China i.e., Matthews China and KraneShares CSI go up and down completely randomly.
Pair Corralation between Matthews China and KraneShares CSI
Given the investment horizon of 90 days Matthews China is expected to generate 2.2 times less return on investment than KraneShares CSI. But when comparing it to its historical volatility, Matthews China Discovery is 1.3 times less risky than KraneShares CSI. It trades about 0.06 of its potential returns per unit of risk. KraneShares CSI China is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,049 in KraneShares CSI China on September 14, 2024 and sell it today you would earn a total of 168.00 from holding KraneShares CSI China or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Discovery vs. KraneShares CSI China
Performance |
| Timeline |
| Matthews China Discovery |
| KraneShares CSI China |
Matthews China and KraneShares CSI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and KraneShares CSI
The main advantage of trading using opposite Matthews China and KraneShares CSI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China 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.| Matthews China vs. KraneShares CSI China | Matthews China vs. Invesco China Technology | Matthews China vs. iShares MSCI India | Matthews China vs. Xtrackers Harvest CSI |
| 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 |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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