Correlation Between Xunlei and Globalfoundries

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

Diversification Opportunities for Xunlei and Globalfoundries

0.33

Correlation Coefficient

Xunlei  Globalfoundries

Weak diversification

The 3 months correlation between Xunlei and Globalfoundries is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries 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 Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of Xunlei i.e., Xunlei and Globalfoundries go up and down completely randomly.

Pair Corralation between Xunlei and Globalfoundries

Given the investment horizon of 90 days Xunlei is expected to generate 1.32 times less return on investment than Globalfoundries. In addition to that, Xunlei is 1.03 times more volatile than Globalfoundries. It trades about 0.04 of its total potential returns per unit of risk. Globalfoundries is currently generating about 0.06 per unit of volatility. If you would invest  3,930  in Globalfoundries on October 22, 2024 and sell it today you would earn a total of  380.00  from holding Globalfoundries or generate 9.67% return on investment over 90 days.

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

Xunlei Ltd Adr  vs.  Globalfoundries

Xunlei Ltd Adr

Risk-Adjusted Performance

3 of 100

Insignificant

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.

Globalfoundries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Globalfoundries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xunlei and Globalfoundries

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

The idea behind Xunlei Ltd Adr and Globalfoundries 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.