Correlation Between Xunlei and Vera Bradley

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

Diversification Opportunities for Xunlei and Vera Bradley

-0.01

Correlation Coefficient

Xunlei  Vera Bradley

Good diversification

The 3 months correlation between Xunlei and Vera is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley 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 Vera Bradley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vera Bradley has no effect on the direction of Xunlei i.e., Xunlei and Vera Bradley go up and down completely randomly.

Pair Corralation between Xunlei and Vera Bradley

Given the investment horizon of 90 days Xunlei Ltd Adr is expected to generate 0.79 times more return on investment than Vera Bradley. However, Xunlei Ltd Adr is 1.27 times less risky than Vera Bradley. It trades about 0.21 of its potential returns per unit of risk. Vera Bradley is currently generating about -0.2 per unit of risk. If you would invest  184.00  in Xunlei Ltd Adr on September 16, 2024 and sell it today you would earn a total of  26.00  from holding Xunlei Ltd Adr or generate 14.13% return on investment over 90 days.

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

Xunlei Ltd Adr  vs.  Vera Bradley

Xunlei Ltd Adr

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xunlei Ltd Adr are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Xunlei unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vera Bradley

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vera Bradley has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Xunlei and Vera Bradley

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

The idea behind Xunlei Ltd Adr and Vera Bradley 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.