Correlation Between Herc Holdings and Xunlei
Can any of the company-specific risk be diversified away by investing in both Herc Holdings 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 Herc Holdings and Xunlei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herc Holdings and Xunlei Ltd Adr, you can compare the effects of market volatilities on Herc Holdings 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 Herc Holdings with a short position of Xunlei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herc Holdings and Xunlei.
Diversification Opportunities for Herc Holdings and Xunlei
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Herc and Xunlei is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Herc 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 Herc Holdings 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 Herc 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 Herc Holdings i.e., Herc Holdings and Xunlei go up and down completely randomly.
Pair Corralation between Herc Holdings and Xunlei
Considering the 90-day investment horizon Herc Holdings is expected to generate 0.78 times more return on investment than Xunlei. However, Herc Holdings is 1.29 times less risky than Xunlei. It trades about 0.2 of its potential returns per unit of risk. Xunlei Ltd Adr is currently generating about 0.06 per unit of risk. If you would invest 20,700 in Herc Holdings on September 3, 2024 and sell it today you would earn a total of 2,500 from holding Herc Holdings or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herc Holdings vs. Xunlei Ltd Adr
Performance |
| Timeline |
| Herc Holdings |
| Xunlei Ltd Adr |
Herc Holdings and Xunlei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herc Holdings and Xunlei
The main advantage of trading using opposite Herc Holdings and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herc Holdings 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.| Herc Holdings vs. McGrath RentCorp | Herc Holdings vs. Alta Equipment Group | Herc Holdings vs. Custom Truck One | Herc Holdings vs. GATX Corporation |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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