Correlation Between KraneShares CSI and Seibels Bruce

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Can any of the company-specific risk be diversified away by investing in both KraneShares CSI and Seibels Bruce 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 Seibels Bruce 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 The Seibels Bruce, you can compare the effects of market volatilities on KraneShares CSI and Seibels Bruce 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 Seibels Bruce. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares CSI and Seibels Bruce.

Diversification Opportunities for KraneShares CSI and Seibels Bruce

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between KraneShares and Seibels is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares CSI China and The Seibels Bruce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seibels Bruce 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 Seibels Bruce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seibels Bruce has no effect on the direction of KraneShares CSI i.e., KraneShares CSI and Seibels Bruce go up and down completely randomly.

Pair Corralation between KraneShares CSI and Seibels Bruce

If you would invest  2,615  in KraneShares CSI China on December 29, 2023 and sell it today you would earn a total of  18.00  from holding KraneShares CSI China or generate 0.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy86.96%
ValuesDaily Returns

KraneShares CSI China  vs.  The Seibels Bruce

 Performance 
       Timeline  
KraneShares CSI China 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days KraneShares CSI China has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, KraneShares CSI is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
Seibels Bruce 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days The Seibels Bruce has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

KraneShares CSI and Seibels Bruce Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KraneShares CSI and Seibels Bruce

The main advantage of trading using opposite KraneShares CSI and Seibels Bruce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares CSI position performs unexpectedly, Seibels Bruce 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 Seibels Bruce will offset losses from the drop in Seibels Bruce's long position.
The idea behind KraneShares CSI China and The Seibels Bruce pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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