Correlation Between Xunlei and Cheche Group

Can any of the company-specific risk be diversified away by investing in both Xunlei and Cheche Group 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 Cheche Group 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 Cheche Group Class, you can compare the effects of market volatilities on Xunlei and Cheche Group 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 Cheche Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xunlei and Cheche Group.

Diversification Opportunities for Xunlei and Cheche Group

0.03

Correlation Coefficient

Xunlei  Cheche Group

Significant diversification

The 3 months correlation between Xunlei and Cheche is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and Cheche Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheche Group Class 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 Cheche Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheche Group Class has no effect on the direction of Xunlei i.e., Xunlei and Cheche Group go up and down completely randomly.

Pair Corralation between Xunlei and Cheche Group

Given the investment horizon of 90 days Xunlei is expected to generate 1.41 times less return on investment than Cheche Group. In addition to that, Xunlei is 1.03 times more volatile than Cheche Group Class. It trades about 0.04 of its total potential returns per unit of risk. Cheche Group Class is currently generating about 0.06 per unit of volatility. If you would invest  79.00  in Cheche Group Class on October 24, 2024 and sell it today you would earn a total of  8.02  from holding Cheche Group Class or generate 10.15% return on investment over 90 days.

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

Xunlei Ltd Adr  vs.  Cheche Group Class

Xunlei Ltd Adr

Risk-Adjusted Performance

3 of 100

Weak

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.

Cheche Group Class

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cheche Group Class are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental indicators, Cheche Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xunlei and Cheche Group

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

The idea behind Xunlei Ltd Adr and Cheche Group Class 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.