Correlation Between Xunlei and Onity

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

Diversification Opportunities for Xunlei and Onity

0.5

Correlation Coefficient

Xunlei  Onity

Very weak diversification

The 3 months correlation between Xunlei and Onity is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and Onity Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onity Group 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 Onity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onity Group has no effect on the direction of Xunlei i.e., Xunlei and Onity go up and down completely randomly.

Pair Corralation between Xunlei and Onity

Given the investment horizon of 90 days Xunlei Ltd Adr is expected to generate 2.57 times more return on investment than Onity. However, Xunlei is 2.57 times more volatile than Onity Group. It trades about 0.26 of its potential returns per unit of risk. Onity Group is currently generating about -0.14 per unit of risk. If you would invest  260.00  in Xunlei Ltd Adr on December 1, 2024 and sell it today you would earn a total of  126.00  from holding Xunlei Ltd Adr or generate 48.46% return on investment over 90 days.

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

Xunlei Ltd Adr  vs.  Onity Group

Xunlei Ltd Adr

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xunlei Ltd Adr are ranked lower than 15 (%) 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.

Onity Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Onity Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward indicators, Onity may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Xunlei and Onity

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

The idea behind Xunlei Ltd Adr and Onity Group 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.