Correlation Between Luxfer Holdings and Xunlei
Can any of the company-specific risk be diversified away by investing in both Luxfer 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 Luxfer Holdings and Xunlei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luxfer Holdings PLC and Xunlei Ltd Adr, you can compare the effects of market volatilities on Luxfer 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 Luxfer Holdings with a short position of Xunlei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Xunlei.
Diversification Opportunities for Luxfer Holdings and Xunlei
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Luxfer and Xunlei is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC 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 Luxfer 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 Luxfer Holdings PLC 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 Luxfer Holdings i.e., Luxfer Holdings and Xunlei go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Xunlei
Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 0.78 times more return on investment than Xunlei. However, Luxfer Holdings PLC is 1.28 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 0.01 per unit of risk. If you would invest 1,310 in Luxfer Holdings PLC on August 29, 2024 and sell it today you would earn a total of 170.00 from holding Luxfer Holdings PLC or generate 12.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. Xunlei Ltd Adr
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Xunlei Ltd Adr |
Luxfer Holdings and Xunlei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Xunlei
The main advantage of trading using opposite Luxfer Holdings and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer 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.| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Hurco Companies |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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