Correlation Between Xunlei and BTC Digital

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

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

Diversification Opportunities for Xunlei and BTC Digital

-0.42

Correlation Coefficient

Xunlei  BTC Digital

Very good diversification

The 3 months correlation between Xunlei and BTC is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and BTC Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTC Digital and Xunlei 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 Xunlei Ltd Adr are associated (or correlated) with BTC Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTC Digital has no effect on the direction of Xunlei i.e., Xunlei and BTC Digital go up and down completely randomly.

Pair Corralation between Xunlei and BTC Digital

Given the investment horizon of 90 days Xunlei Ltd Adr is expected to generate 0.55 times more return on investment than BTC Digital. However, Xunlei Ltd Adr is 1.81 times less risky than BTC Digital. It trades about 0.23 of its potential returns per unit of risk. BTC Digital is currently generating about 0.03 per unit of risk. If you would invest  206.00  in Xunlei Ltd Adr on December 27, 2024 and sell it today you would earn a total of  255.00  from holding Xunlei Ltd Adr or generate 123.79% return on investment over 90 days.

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

Xunlei Ltd Adr  vs.  BTC Digital

Xunlei Ltd Adr

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xunlei Ltd Adr are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Xunlei unveiled solid returns over the last few months and may actually be approaching a breakup point.

BTC Digital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BTC Digital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, BTC Digital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xunlei and BTC Digital

The main advantage of trading using opposite Xunlei and BTC Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xunlei position performs unexpectedly, BTC Digital 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 BTC Digital will offset losses from the drop in BTC Digital's long position.

The idea behind Xunlei Ltd Adr and BTC Digital 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.