Correlation Between LuxUrban Hotels and Xunlei

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

By analyzing existing cross correlation between LuxUrban Hotels 1300 and Xunlei Ltd Adr, you can compare the effects of market volatilities on LuxUrban Hotels 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 LuxUrban Hotels with a short position of Xunlei. Check out your portfolio center. Please also check ongoing floating volatility patterns of LuxUrban Hotels and Xunlei.

Diversification Opportunities for LuxUrban Hotels and Xunlei

-0.06

Correlation Coefficient

LuxUrban Hotels  Xunlei

Good diversification

The 3 months correlation between LuxUrban and Xunlei is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding LuxUrban Hotels 1300 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 LuxUrban Hotels 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 LuxUrban Hotels 1300 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 LuxUrban Hotels i.e., LuxUrban Hotels and Xunlei go up and down completely randomly.

Pair Corralation between LuxUrban Hotels and Xunlei

Assuming the 90 days horizon LuxUrban Hotels 1300 is expected to under-perform the Xunlei. In addition to that, LuxUrban Hotels is 1.26 times more volatile than Xunlei Ltd Adr. It trades about 0.0 of its total potential returns per unit of risk. Xunlei Ltd Adr is currently generating about 0.02 per unit of volatility. If you would invest  212.00  in Xunlei Ltd Adr on October 11, 2024 and sell it today you would lose (2.00) from holding Xunlei Ltd Adr or give up 0.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.69%
Values	Daily Returns

LuxUrban Hotels 1300  vs.  Xunlei Ltd Adr

LuxUrban Hotels 1300

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LuxUrban Hotels 1300 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical indicators, LuxUrban Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

Xunlei Ltd Adr

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xunlei Ltd Adr are ranked lower than 2 (%) 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 LuxUrban Hotels and Xunlei

The main advantage of trading using opposite LuxUrban Hotels and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LuxUrban Hotels 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 LuxUrban Hotels 1300 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 Transaction History module to view history of all your transactions and understand their impact on performance.