Correlation Between Xunlei and 48305QAB9

Can any of the company-specific risk be diversified away by investing in both Xunlei and 48305QAB9 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 48305QAB9 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 US48305QAB95, you can compare the effects of market volatilities on Xunlei and 48305QAB9 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 48305QAB9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xunlei and 48305QAB9.

Diversification Opportunities for Xunlei and 48305QAB9

-0.31

Correlation Coefficient

Xunlei  48305QAB9

Very good diversification

The 3 months correlation between Xunlei and 48305QAB9 is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and US48305QAB95 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US48305QAB95 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 48305QAB9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US48305QAB95 has no effect on the direction of Xunlei i.e., Xunlei and 48305QAB9 go up and down completely randomly.

Pair Corralation between Xunlei and 48305QAB9

Given the investment horizon of 90 days Xunlei Ltd Adr is expected to generate 2.27 times more return on investment than 48305QAB9. However, Xunlei is 2.27 times more volatile than US48305QAB95. It trades about 0.04 of its potential returns per unit of risk. US48305QAB95 is currently generating about 0.03 per unit of risk. If you would invest  202.00  in Xunlei Ltd Adr on October 12, 2024 and sell it today you would earn a total of  8.00  from holding Xunlei Ltd Adr or generate 3.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	57.38%
Values	Daily Returns

Xunlei Ltd Adr  vs.  US48305QAB95

Xunlei Ltd Adr

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xunlei Ltd Adr are ranked lower than 2 (%) 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.

US48305QAB95

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in US48305QAB95 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 48305QAB9 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Xunlei and 48305QAB9

The main advantage of trading using opposite Xunlei and 48305QAB9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xunlei position performs unexpectedly, 48305QAB9 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 48305QAB9 will offset losses from the drop in 48305QAB9's long position.

The idea behind Xunlei Ltd Adr and US48305QAB95 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.