Correlation Between HE Equipment and Xunlei
Can any of the company-specific risk be diversified away by investing in both HE Equipment 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 HE Equipment and Xunlei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and Xunlei Ltd Adr, you can compare the effects of market volatilities on HE Equipment 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 HE Equipment with a short position of Xunlei. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Xunlei.
Diversification Opportunities for HE Equipment and Xunlei
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HEES and Xunlei is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services 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 HE Equipment 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 HE Equipment Services 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 HE Equipment i.e., HE Equipment and Xunlei go up and down completely randomly.
Pair Corralation between HE Equipment and Xunlei
Given the investment horizon of 90 days HE Equipment is expected to generate 1.5 times less return on investment than Xunlei. But when comparing it to its historical volatility, HE Equipment Services is 1.18 times less risky than Xunlei. It trades about 0.04 of its potential returns per unit of risk. Xunlei Ltd Adr is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 149.00 in Xunlei Ltd Adr on September 14, 2024 and sell it today you would earn a total of 61.00 from holding Xunlei Ltd Adr or generate 40.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. Xunlei Ltd Adr
Performance |
| Timeline |
| HE Equipment Services |
| Xunlei Ltd Adr |
HE Equipment and Xunlei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and Xunlei
The main advantage of trading using opposite HE Equipment and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment 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.| HE Equipment vs. McGrath RentCorp | HE Equipment vs. Custom Truck One | HE Equipment vs. Herc Holdings | HE Equipment vs. Alta Equipment Group |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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