Correlation Between Xunlei and Summit Midstream

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

Diversification Opportunities for Xunlei and Summit Midstream

0.09

Correlation Coefficient

Xunlei  Summit Midstream

Significant diversification

The 3 months correlation between Xunlei and Summit is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream 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 Summit Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Midstream has no effect on the direction of Xunlei i.e., Xunlei and Summit Midstream go up and down completely randomly.

Pair Corralation between Xunlei and Summit Midstream

Given the investment horizon of 90 days Xunlei is expected to generate 3.92 times less return on investment than Summit Midstream. But when comparing it to its historical volatility, Xunlei Ltd Adr is 1.05 times less risky than Summit Midstream. It trades about 0.02 of its potential returns per unit of risk. Summit Midstream is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,679  in Summit Midstream on October 3, 2024 and sell it today you would earn a total of  2,099  from holding Summit Midstream or generate 125.01% 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.  Summit Midstream

Xunlei Ltd Adr

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xunlei Ltd Adr are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Xunlei is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Summit Midstream

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summit Midstream has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Summit Midstream is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Xunlei and Summit Midstream

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

The idea behind Xunlei Ltd Adr and Summit Midstream 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..