Correlation Between Xunlei and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Xunlei and Nordic Semiconductor 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 Nordic Semiconductor 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 Nordic Semiconductor ASA, you can compare the effects of market volatilities on Xunlei and Nordic Semiconductor 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 Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xunlei and Nordic Semiconductor.
Diversification Opportunities for Xunlei and Nordic Semiconductor
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xunlei and Nordic is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA 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 Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of Xunlei i.e., Xunlei and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Xunlei and Nordic Semiconductor
Given the investment horizon of 90 days Xunlei Ltd Adr is expected to generate 0.93 times more return on investment than Nordic Semiconductor. However, Xunlei Ltd Adr is 1.07 times less risky than Nordic Semiconductor. It trades about 0.07 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.01 per unit of risk. If you would invest 189.00 in Xunlei Ltd Adr on December 12, 2024 and sell it today you would earn a total of 303.00 from holding Xunlei Ltd Adr or generate 160.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Xunlei Ltd Adr vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Xunlei Ltd Adr |
| Nordic Semiconductor ASA |
Xunlei and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xunlei and Nordic Semiconductor
The main advantage of trading using opposite Xunlei and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xunlei position performs unexpectedly, Nordic Semiconductor 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 Nordic Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.| Xunlei vs. Travelzoo | ||
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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