Correlation Between IShares China and CHIU

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

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

Diversification Opportunities for IShares China and CHIU

0.51

Correlation Coefficient

IShares China  CHIU

Very weak diversification

The 3 months correlation between IShares and CHIU is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding iShares China Large Cap and CHIU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIU and IShares 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 iShares China Large Cap are associated (or correlated) with CHIU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIU has no effect on the direction of IShares China i.e., IShares China and CHIU go up and down completely randomly.

Pair Corralation between IShares China and CHIU

If you would invest  2,727  in iShares China Large Cap on September 22, 2024 and sell it today you would earn a total of  315.00  from holding iShares China Large Cap or generate 11.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

iShares China Large Cap  vs.  CHIU

iShares China Large

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares China Large Cap are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, IShares China demonstrated solid returns over the last few months and may actually be approaching a breakup point.

CHIU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHIU has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, CHIU is not utilizing all of its potentials. The new stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares China and CHIU

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

The idea behind iShares China Large Cap and CHIU 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..