Correlation Between Xunlei and Opera

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

Diversification Opportunities for Xunlei and Opera

0.19

Correlation Coefficient

Xunlei  Opera

Average diversification

The 3 months correlation between Xunlei and Opera is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and Opera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opera 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 Opera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opera has no effect on the direction of Xunlei i.e., Xunlei and Opera go up and down completely randomly.

Pair Corralation between Xunlei and Opera

Given the investment horizon of 90 days Xunlei Ltd Adr is expected to generate 1.76 times more return on investment than Opera. However, Xunlei is 1.76 times more volatile than Opera. It trades about 0.11 of its potential returns per unit of risk. Opera is currently generating about 0.02 per unit of risk. If you would invest  199.00  in Xunlei Ltd Adr on October 20, 2024 and sell it today you would earn a total of  13.00  from holding Xunlei Ltd Adr or generate 6.53% 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.  Opera

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.

Opera

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Opera are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Opera sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xunlei and Opera

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

The idea behind Xunlei Ltd Adr and Opera 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.