Correlation Between Xunlei and Fomento Economico
Can any of the company-specific risk be diversified away by investing in both Xunlei and Fomento Economico 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 Xunlei and Fomento Economico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xunlei Ltd Adr and Fomento Economico Mexicano, you can compare the effects of market volatilities on Xunlei and Fomento Economico 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 Xunlei with a short position of Fomento Economico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xunlei and Fomento Economico.
Diversification Opportunities for Xunlei and Fomento Economico
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xunlei and Fomento is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico and Xunlei 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 Xunlei Ltd Adr are associated (or correlated) with Fomento Economico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Economico has no effect on the direction of Xunlei i.e., Xunlei and Fomento Economico go up and down completely randomly.
Pair Corralation between Xunlei and Fomento Economico
Given the investment horizon of 90 days Xunlei Ltd Adr is expected to generate 3.39 times more return on investment than Fomento Economico. However, Xunlei is 3.39 times more volatile than Fomento Economico Mexicano. It trades about -0.08 of its potential returns per unit of risk. Fomento Economico Mexicano is currently generating about -0.41 per unit of risk. If you would invest 206.00 in Xunlei Ltd Adr on August 28, 2024 and sell it today you would lose (17.00) from holding Xunlei Ltd Adr or give up 8.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xunlei Ltd Adr vs. Fomento Economico Mexicano
Performance |
| Timeline |
| Xunlei Ltd Adr |
| Fomento Economico |
Xunlei and Fomento Economico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xunlei and Fomento Economico
The main advantage of trading using opposite Xunlei and Fomento Economico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xunlei position performs unexpectedly, Fomento Economico 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 Fomento Economico will offset losses from the drop in Fomento Economico's long position.| Xunlei vs. Travelzoo | Xunlei vs. Emerald Expositions Events | Xunlei vs. Ziff Davis | Xunlei vs. Direct Digital Holdings |
| Fomento Economico vs. Ambev SA ADR | Fomento Economico vs. Boston Beer | Fomento Economico vs. Molson Coors Brewing | Fomento Economico vs. Compania Cervecerias Unidas |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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