Correlation Between Shanrong Biotechnology and Xunlei

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

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

Diversification Opportunities for Shanrong Biotechnology and Xunlei

-0.1

Correlation Coefficient

Shanrong Biotechnology  Xunlei

Good diversification

The 3 months correlation between Shanrong and Xunlei is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Shanrong Biotechnology Corp 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 Shanrong Biotechnology 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 Shanrong Biotechnology Corp 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 Shanrong Biotechnology i.e., Shanrong Biotechnology and Xunlei go up and down completely randomly.

Pair Corralation between Shanrong Biotechnology and Xunlei

Given the investment horizon of 90 days Shanrong Biotechnology Corp is expected to generate 33.83 times more return on investment than Xunlei. However, Shanrong Biotechnology is 33.83 times more volatile than Xunlei Ltd Adr. It trades about 0.27 of its potential returns per unit of risk. Xunlei Ltd Adr is currently generating about 0.06 per unit of risk. If you would invest  11.00  in Shanrong Biotechnology Corp on October 26, 2024 and sell it today you would earn a total of  89.00  from holding Shanrong Biotechnology Corp or generate 809.09% return on investment over 90 days.

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

Shanrong Biotechnology Corp  vs.  Xunlei Ltd Adr

Shanrong Biotechnology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shanrong Biotechnology Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental drivers, Shanrong Biotechnology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Xunlei Ltd Adr

Risk-Adjusted Performance

2 of 100

Insignificant

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 Shanrong Biotechnology and Xunlei

The main advantage of trading using opposite Shanrong Biotechnology and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanrong Biotechnology 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 Shanrong Biotechnology Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.