Correlation Between KraneShares Emerging and Optimize Strategy

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

By analyzing existing cross correlation between KraneShares Emerging Markets and Optimize Strategy Index, you can compare the effects of market volatilities on KraneShares Emerging and Optimize Strategy 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 Emerging with a short position of Optimize Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares Emerging and Optimize Strategy.

Diversification Opportunities for KraneShares Emerging and Optimize Strategy

0.94

Correlation Coefficient

KraneShares Emerging  Optimize Strategy

Almost no diversification

The 3 months correlation between KraneShares and Optimize is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Emerging Markets and Optimize Strategy Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimize Strategy Index and KraneShares Emerging 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 Emerging Markets are associated (or correlated) with Optimize Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimize Strategy Index has no effect on the direction of KraneShares Emerging i.e., KraneShares Emerging and Optimize Strategy go up and down completely randomly.

Pair Corralation between KraneShares Emerging and Optimize Strategy

Given the investment horizon of 90 days KraneShares Emerging is expected to generate 1.06 times less return on investment than Optimize Strategy. In addition to that, KraneShares Emerging is 1.07 times more volatile than Optimize Strategy Index. It trades about 0.16 of its total potential returns per unit of risk. Optimize Strategy Index is currently generating about 0.18 per unit of volatility. If you would invest  2,758  in Optimize Strategy Index on May 5, 2025 and sell it today you would earn a total of  380.00  from holding Optimize Strategy Index or generate 13.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

KraneShares Emerging Markets  vs.  Optimize Strategy Index

KraneShares Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Emerging Markets are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, KraneShares Emerging reported solid returns over the last few months and may actually be approaching a breakup point.

Optimize Strategy Index

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Optimize Strategy Index are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Optimize Strategy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KraneShares Emerging and Optimize Strategy

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

The idea behind KraneShares Emerging Markets and Optimize Strategy Index 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.