Correlation Between Qualys and Xunlei

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

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

Diversification Opportunities for Qualys and Xunlei

0.14

Correlation Coefficient

Qualys  Xunlei

Average diversification

The 3 months correlation between Qualys and Xunlei is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Qualys 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 Qualys 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 Qualys 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 Qualys i.e., Qualys and Xunlei go up and down completely randomly.

Pair Corralation between Qualys and Xunlei

Given the investment horizon of 90 days Qualys Inc is expected to generate 0.99 times more return on investment than Xunlei. However, Qualys Inc is 1.02 times less risky than Xunlei. It trades about 0.09 of its potential returns per unit of risk. Xunlei Ltd Adr is currently generating about 0.04 per unit of risk. If you would invest  12,112  in Qualys Inc on October 25, 2024 and sell it today you would earn a total of  1,986  from holding Qualys Inc or generate 16.4% return on investment over 90 days.

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

Qualys Inc  vs.  Xunlei Ltd Adr

Qualys Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Qualys Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Qualys unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 Qualys and Xunlei

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

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.