Correlation Between Fluent and Xunlei

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

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

Diversification Opportunities for Fluent and Xunlei

0.28

Correlation Coefficient

Fluent  Xunlei

Modest diversification

The 3 months correlation between Fluent and Xunlei is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fluent Inc 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 Fluent 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 Fluent Inc 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 Fluent i.e., Fluent and Xunlei go up and down completely randomly.

Pair Corralation between Fluent and Xunlei

Given the investment horizon of 90 days Fluent Inc is expected to under-perform the Xunlei. In addition to that, Fluent is 1.06 times more volatile than Xunlei Ltd Adr. It trades about -0.01 of its total potential returns per unit of risk. Xunlei Ltd Adr is currently generating about 0.13 per unit of volatility. If you would invest  157.00  in Xunlei Ltd Adr on September 4, 2024 and sell it today you would earn a total of  57.00  from holding Xunlei Ltd Adr or generate 36.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Fluent Inc  vs.  Xunlei Ltd Adr

Fluent Inc

Risk-Adjusted Performance

0 of 100

Weak

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

Xunlei Ltd Adr

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xunlei Ltd Adr are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Xunlei unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fluent and Xunlei

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

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.