Correlation Between World Houseware and Xunlei

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

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

Diversification Opportunities for World Houseware and Xunlei

0.0

Correlation Coefficient

World Houseware  Xunlei

Pay attention - limited upside

The 3 months correlation between World and Xunlei is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding World Houseware 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 World Houseware 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 World Houseware 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 World Houseware i.e., World Houseware and Xunlei go up and down completely randomly.

Pair Corralation between World Houseware and Xunlei

Assuming the 90 days horizon World Houseware Limited is expected to under-perform the Xunlei. In addition to that, World Houseware is 1.26 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 0.02 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	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

World Houseware Limited  vs.  Xunlei Ltd Adr

World Houseware

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days World Houseware Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, World Houseware is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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 World Houseware and Xunlei

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

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.