Correlation Between Cimpress and Xunlei

Can any of the company-specific risk be diversified away by investing in both Cimpress 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 Cimpress and Xunlei into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cimpress NV and Xunlei Ltd Adr, you can compare the effects of market volatilities on Cimpress 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 Cimpress with a short position of Xunlei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cimpress and Xunlei.

Diversification Opportunities for Cimpress and Xunlei

0.06

Correlation Coefficient

Cimpress  Xunlei

Significant diversification

The 3 months correlation between Cimpress and Xunlei is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Cimpress NV 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 Cimpress 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 Cimpress NV 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 Cimpress i.e., Cimpress and Xunlei go up and down completely randomly.

Pair Corralation between Cimpress and Xunlei

Given the investment horizon of 90 days Cimpress NV is expected to under-perform the Xunlei. But the stock apears to be less risky and, when comparing its historical volatility, Cimpress NV is 1.88 times less risky than Xunlei. The stock trades about -0.52 of its potential returns per unit of risk. The Xunlei Ltd Adr is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  219.00  in Xunlei Ltd Adr on October 8, 2024 and sell it today you would lose (14.00) from holding Xunlei Ltd Adr or give up 6.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cimpress NV  vs.  Xunlei Ltd Adr

Cimpress NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cimpress NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Xunlei Ltd Adr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xunlei Ltd Adr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Xunlei is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cimpress and Xunlei

The main advantage of trading using opposite Cimpress and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cimpress 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.

The idea behind Cimpress NV and Xunlei Ltd Adr 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 Global Correlations module to find global opportunities by holding instruments from different markets.