Correlation Between Amgen and Xunlei
Can any of the company-specific risk be diversified away by investing in both Amgen and Xunlei 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 Amgen and Xunlei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Xunlei Ltd Adr, you can compare the effects of market volatilities on Amgen and Xunlei 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 Amgen with a short position of Xunlei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Xunlei.
Diversification Opportunities for Amgen and Xunlei
Very good diversification
The 3 months correlation between Amgen and Xunlei is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Xunlei Ltd Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xunlei Ltd Adr and Amgen 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 Amgen Inc are associated (or correlated) with Xunlei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xunlei Ltd Adr has no effect on the direction of Amgen i.e., Amgen and Xunlei go up and down completely randomly.
Pair Corralation between Amgen and Xunlei
Given the investment horizon of 90 days Amgen is expected to generate 3.81 times less return on investment than Xunlei. But when comparing it to its historical volatility, Amgen Inc is 1.93 times less risky than Xunlei. It trades about 0.02 of its potential returns per unit of risk. Xunlei Ltd Adr is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 168.00 in Xunlei Ltd Adr on September 4, 2024 and sell it today you would earn a total of 46.00 from holding Xunlei Ltd Adr or generate 27.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amgen Inc vs. Xunlei Ltd Adr
Performance |
| Timeline |
| Amgen Inc |
| Xunlei Ltd Adr |
Amgen and Xunlei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Xunlei
The main advantage of trading using opposite Amgen and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Xunlei 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 Xunlei will offset losses from the drop in Xunlei's long position.The idea behind Amgen Inc and Xunlei Ltd Adr 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.| Xunlei vs. Travelzoo | Xunlei vs. Emerald Expositions Events | Xunlei vs. Ziff Davis | Xunlei vs. Direct Digital Holdings |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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