Correlation Between National CineMedia and Xunlei
Can any of the company-specific risk be diversified away by investing in both National CineMedia 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 National CineMedia and Xunlei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and Xunlei Ltd Adr, you can compare the effects of market volatilities on National CineMedia 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 National CineMedia with a short position of Xunlei. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Xunlei.
Diversification Opportunities for National CineMedia and Xunlei
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Xunlei is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia 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 National CineMedia 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 National CineMedia 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 National CineMedia i.e., National CineMedia and Xunlei go up and down completely randomly.
Pair Corralation between National CineMedia and Xunlei
Given the investment horizon of 90 days National CineMedia is expected to generate 1.05 times more return on investment than Xunlei. However, National CineMedia is 1.05 times more volatile than Xunlei Ltd Adr. It trades about 0.09 of its potential returns per unit of risk. Xunlei Ltd Adr is currently generating about 0.03 per unit of risk. If you would invest 391.00 in National CineMedia on August 29, 2024 and sell it today you would earn a total of 299.00 from holding National CineMedia or generate 76.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
National CineMedia vs. Xunlei Ltd Adr
Performance |
| Timeline |
| National CineMedia |
| Xunlei Ltd Adr |
National CineMedia and Xunlei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and Xunlei
The main advantage of trading using opposite National CineMedia and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia 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.| National CineMedia vs. Capital Income Builder | National CineMedia vs. Direxion Daily FTSE | National CineMedia vs. Dodge Global Stock | National CineMedia vs. Collegium Pharmaceutical |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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