Correlation Between Reservoir Media and Xunlei
Can any of the company-specific risk be diversified away by investing in both Reservoir Media 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 Reservoir Media and Xunlei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reservoir Media and Xunlei Ltd Adr, you can compare the effects of market volatilities on Reservoir Media 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 Reservoir Media with a short position of Xunlei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reservoir Media and Xunlei.
Diversification Opportunities for Reservoir Media and Xunlei
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reservoir and Xunlei is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Reservoir Media 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 Reservoir Media 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 Reservoir Media 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 Reservoir Media i.e., Reservoir Media and Xunlei go up and down completely randomly.
Pair Corralation between Reservoir Media and Xunlei
Given the investment horizon of 90 days Reservoir Media is expected to generate 0.65 times more return on investment than Xunlei. However, Reservoir Media is 1.54 times less risky than Xunlei. It trades about 0.06 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 628.00 in Reservoir Media on August 26, 2024 and sell it today you would earn a total of 315.00 from holding Reservoir Media or generate 50.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reservoir Media vs. Xunlei Ltd Adr
Performance |
| Timeline |
| Reservoir Media |
| Xunlei Ltd Adr |
Reservoir Media and Xunlei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reservoir Media and Xunlei
The main advantage of trading using opposite Reservoir Media and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reservoir Media 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.| Reservoir Media vs. Reading International | Reservoir Media vs. Marcus | Reservoir Media vs. Gaia Inc | Reservoir Media vs. News Corp B |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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