Correlation Between Alphabet and Xunlei
Can any of the company-specific risk be diversified away by investing in both Alphabet and Xunlei 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 Alphabet and Xunlei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Xunlei Ltd Adr, you can compare the effects of market volatilities on Alphabet and Xunlei 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 Alphabet with a short position of Xunlei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Xunlei.
Diversification Opportunities for Alphabet and Xunlei
Significant diversification
The 3 months correlation between Alphabet and Xunlei is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Xunlei Ltd Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xunlei Ltd Adr and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Xunlei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xunlei Ltd Adr has no effect on the direction of Alphabet i.e., Alphabet and Xunlei go up and down completely randomly.
Pair Corralation between Alphabet and Xunlei
Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 1.02 times more return on investment than Xunlei. However, Alphabet is 1.02 times more volatile than Xunlei Ltd Adr. It trades about 0.05 of its potential returns per unit of risk. Xunlei Ltd Adr is currently generating about 0.03 per unit of risk. If you would invest 15,379 in Alphabet Inc Class C on January 26, 2024 and sell it today you would earn a total of 731.00 from holding Alphabet Inc Class C or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Xunlei Ltd Adr
Performance |
| Timeline |
| Alphabet Class C |
| Xunlei Ltd Adr |
Alphabet and Xunlei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Xunlei
The main advantage of trading using opposite Alphabet and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Xunlei 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 Xunlei will offset losses from the drop in Xunlei's long position.The idea behind Alphabet Inc Class C and Xunlei Ltd Adr 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.| Xunlei vs. Interpublic Group of | Xunlei vs. Criteo Sa | Xunlei vs. WPP PLC ADR | Xunlei vs. Integral Ad Science |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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