Correlation Between Xunlei and WesBanco

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

Diversification Opportunities for Xunlei and WesBanco

-0.03

Correlation Coefficient

Xunlei  WesBanco

Good diversification

The 3 months correlation between Xunlei and WesBanco is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco 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 WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Xunlei i.e., Xunlei and WesBanco go up and down completely randomly.

Pair Corralation between Xunlei and WesBanco

Given the investment horizon of 90 days Xunlei Ltd Adr is expected to generate 2.42 times more return on investment than WesBanco. However, Xunlei is 2.42 times more volatile than WesBanco. It trades about 0.02 of its potential returns per unit of risk. WesBanco is currently generating about 0.03 per unit of risk. If you would invest  201.00  in Xunlei Ltd Adr on October 25, 2024 and sell it today you would earn a total of  14.00  from holding Xunlei Ltd Adr or generate 6.97% 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.  WesBanco

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.

WesBanco

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WesBanco are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, WesBanco is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Xunlei and WesBanco

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

The idea behind Xunlei Ltd Adr and WesBanco 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 Anywhere module to track or share privately all of your investments from the convenience of any device.