Correlation Between Xunlei and 871911AT0

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Can any of the company-specific risk be diversified away by investing in both Xunlei and 871911AT0 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 871911AT0 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 US871911AT09, you can compare the effects of market volatilities on Xunlei and 871911AT0 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 871911AT0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xunlei and 871911AT0.

Diversification Opportunities for Xunlei and 871911AT0

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Xunlei and 871911AT0 is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and US871911AT09 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US871911AT09 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 871911AT0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US871911AT09 has no effect on the direction of Xunlei i.e., Xunlei and 871911AT0 go up and down completely randomly.

Pair Corralation between Xunlei and 871911AT0

Given the investment horizon of 90 days Xunlei Ltd Adr is expected to generate 4.32 times more return on investment than 871911AT0. However, Xunlei is 4.32 times more volatile than US871911AT09. It trades about 0.02 of its potential returns per unit of risk. US871911AT09 is currently generating about 0.05 per unit of risk. If you would invest  201.00  in Xunlei Ltd Adr on October 25, 2024 and sell it today you would earn a total of  14.00  from holding Xunlei Ltd Adr or generate 6.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy36.71%
ValuesDaily Returns

Xunlei Ltd Adr  vs.  US871911AT09

 Performance 
       Timeline  
Xunlei Ltd Adr 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Xunlei Ltd Adr are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Xunlei may actually be approaching a critical reversion point that can send shares even higher in February 2025.
US871911AT09 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in US871911AT09 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 871911AT0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Xunlei and 871911AT0 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xunlei and 871911AT0

The main advantage of trading using opposite Xunlei and 871911AT0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xunlei position performs unexpectedly, 871911AT0 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 871911AT0 will offset losses from the drop in 871911AT0's long position.
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The idea behind Xunlei Ltd Adr and US871911AT09 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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