Correlation Between Designer Brands and Xunlei

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

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

Diversification Opportunities for Designer Brands and Xunlei

0.38

Correlation Coefficient

Designer Brands  Xunlei

Weak diversification

The 3 months correlation between Designer and Xunlei is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands 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 Designer Brands 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 Designer Brands 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 Designer Brands i.e., Designer Brands and Xunlei go up and down completely randomly.

Pair Corralation between Designer Brands and Xunlei

Considering the 90-day investment horizon Designer Brands is expected to generate 1.13 times less return on investment than Xunlei. In addition to that, Designer Brands is 1.32 times more volatile than Xunlei Ltd Adr. It trades about 0.08 of its total potential returns per unit of risk. Xunlei Ltd Adr is currently generating about 0.12 per unit of volatility. 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 Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Designer Brands  vs.  Xunlei Ltd Adr

Designer Brands

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Designer Brands are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal fundamental drivers, Designer Brands may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Xunlei Ltd Adr

Risk-Adjusted Performance

3 of 100

Insignificant

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.

Pair Trading with Designer Brands and Xunlei

The main advantage of trading using opposite Designer Brands and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands 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 Designer Brands 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.