Correlation Between Direct Digital and Xunlei
Can any of the company-specific risk be diversified away by investing in both Direct Digital 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 Direct Digital and Xunlei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direct Digital Holdings and Xunlei Ltd Adr, you can compare the effects of market volatilities on Direct Digital 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 Direct Digital with a short position of Xunlei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Digital and Xunlei.
Diversification Opportunities for Direct Digital and Xunlei
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Direct and Xunlei is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Direct Digital Holdings 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 Direct Digital 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 Direct Digital Holdings 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 Direct Digital i.e., Direct Digital and Xunlei go up and down completely randomly.
Pair Corralation between Direct Digital and Xunlei
Given the investment horizon of 90 days Direct Digital Holdings is expected to under-perform the Xunlei. But the stock apears to be less risky and, when comparing its historical volatility, Direct Digital Holdings is 1.13 times less risky than Xunlei. The stock trades about -0.14 of its potential returns per unit of risk. The Xunlei Ltd Adr is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest 212.00 in Xunlei Ltd Adr on November 18, 2024 and sell it today you would earn a total of 143.00 from holding Xunlei Ltd Adr or generate 67.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direct Digital Holdings vs. Xunlei Ltd Adr
Performance |
| Timeline |
| Direct Digital Holdings |
| Xunlei Ltd Adr |
Direct Digital and Xunlei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Digital and Xunlei
The main advantage of trading using opposite Direct Digital and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Digital 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.| Direct Digital vs. Emerald Expositions Events | Direct Digital vs. Mirriad Advertising plc | Direct Digital vs. INEO Tech Corp | Direct Digital vs. Marchex |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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