Correlation Between Raytech Holding and Xunlei

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

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

Diversification Opportunities for Raytech Holding and Xunlei

-0.55

Correlation Coefficient

Raytech Holding  Xunlei

Excellent diversification

The 3 months correlation between Raytech and Xunlei is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Raytech Holding Limited 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 Raytech Holding 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 Raytech Holding Limited 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 Raytech Holding i.e., Raytech Holding and Xunlei go up and down completely randomly.

Pair Corralation between Raytech Holding and Xunlei

Considering the 90-day investment horizon Raytech Holding is expected to generate 18.83 times less return on investment than Xunlei. In addition to that, Raytech Holding is 1.83 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 0.2 per unit of volatility. If you would invest  184.00  in Xunlei Ltd Adr on September 17, 2024 and sell it today you would earn a total of  25.50  from holding Xunlei Ltd Adr or generate 13.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Raytech Holding Limited  vs.  Xunlei Ltd Adr

Raytech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raytech Holding Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Raytech Holding is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Xunlei Ltd Adr

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xunlei Ltd Adr are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Xunlei unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Raytech Holding and Xunlei

The main advantage of trading using opposite Raytech Holding and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytech Holding 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 Raytech Holding Limited 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.