Correlation Between Xunlei and WPP PLC
Can any of the company-specific risk be diversified away by investing in both Xunlei and WPP PLC 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 WPP PLC 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 WPP PLC ADR, you can compare the effects of market volatilities on Xunlei and WPP PLC 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 WPP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xunlei and WPP PLC.
Diversification Opportunities for Xunlei and WPP PLC
Poor diversification
The 3 months correlation between Xunlei and WPP is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and WPP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP PLC ADR 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 WPP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPP PLC ADR has no effect on the direction of Xunlei i.e., Xunlei and WPP PLC go up and down completely randomly.
Pair Corralation between Xunlei and WPP PLC
Given the investment horizon of 90 days Xunlei Ltd Adr is expected to generate 2.39 times more return on investment than WPP PLC. However, Xunlei is 2.39 times more volatile than WPP PLC ADR. It trades about 0.06 of its potential returns per unit of risk. WPP PLC ADR is currently generating about 0.1 per unit of risk. If you would invest 147.00 in Xunlei Ltd Adr on September 1, 2024 and sell it today you would earn a total of 51.00 from holding Xunlei Ltd Adr or generate 34.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xunlei Ltd Adr vs. WPP PLC ADR
Performance |
| Timeline |
| Xunlei Ltd Adr |
| WPP PLC ADR |
Xunlei and WPP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xunlei and WPP PLC
The main advantage of trading using opposite Xunlei and WPP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xunlei position performs unexpectedly, WPP PLC 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 WPP PLC will offset losses from the drop in WPP PLC's long position.| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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