Correlation Between CHII and IShares MSCI

Can any of the company-specific risk be diversified away by investing in both CHII and IShares MSCI 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 CHII and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CHII and iShares MSCI China, you can compare the effects of market volatilities on CHII and IShares MSCI 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 CHII with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHII and IShares MSCI.

Diversification Opportunities for CHII and IShares MSCI

0.17

Correlation Coefficient

CHII  IShares MSCI

Average diversification

The 3 months correlation between CHII and IShares is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CHII and iShares MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI China and CHII 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 CHII are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI China has no effect on the direction of CHII i.e., CHII and IShares MSCI go up and down completely randomly.

Pair Corralation between CHII and IShares MSCI

If you would invest  2,210  in iShares MSCI China on September 21, 2024 and sell it today you would earn a total of  342.00  from holding iShares MSCI China or generate 15.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	3.13%
Values	Daily Returns

CHII  vs.  iShares MSCI China

CHII

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHII has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, CHII is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

iShares MSCI China

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI China are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares MSCI unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHII and IShares MSCI

The main advantage of trading using opposite CHII and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHII position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.

The idea behind CHII and iShares MSCI China 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.