Correlation Between ScanSource and Xunlei
Can any of the company-specific risk be diversified away by investing in both ScanSource 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 ScanSource and Xunlei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and Xunlei Ltd Adr, you can compare the effects of market volatilities on ScanSource 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 ScanSource with a short position of Xunlei. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Xunlei.
Diversification Opportunities for ScanSource and Xunlei
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ScanSource and Xunlei is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource 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 ScanSource 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 ScanSource 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 ScanSource i.e., ScanSource and Xunlei go up and down completely randomly.
Pair Corralation between ScanSource and Xunlei
Given the investment horizon of 90 days ScanSource is expected to generate 0.85 times more return on investment than Xunlei. However, ScanSource is 1.18 times less risky than Xunlei. It trades about 0.15 of its potential returns per unit of risk. Xunlei Ltd Adr is currently generating about -0.07 per unit of risk. If you would invest 4,555 in ScanSource on August 30, 2024 and sell it today you would earn a total of 494.00 from holding ScanSource or generate 10.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. Xunlei Ltd Adr
Performance |
| Timeline |
| ScanSource |
| Xunlei Ltd Adr |
ScanSource and Xunlei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and Xunlei
The main advantage of trading using opposite ScanSource and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource 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.| ScanSource vs. Insight Enterprises | ScanSource vs. Synnex | ScanSource vs. Climb Global Solutions | ScanSource vs. PC Connection |
| Xunlei vs. Alarum Technologies | Xunlei vs. Nutanix | Xunlei vs. Palo Alto Networks | Xunlei vs. GigaCloud Technology Class |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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