Correlation Between Xunlei and Alphabet

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

Diversification Opportunities for Xunlei and Alphabet

0.0

Correlation Coefficient

Xunlei  Alphabet

Pay attention - limited upside

The 3 months correlation between Xunlei and Alphabet is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and Alphabet Inc Class C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class C 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class C has no effect on the direction of Xunlei i.e., Xunlei and Alphabet go up and down completely randomly.

Pair Corralation between Xunlei and Alphabet

Given the investment horizon of 90 days Xunlei is expected to generate 39.94 times less return on investment than Alphabet. But when comparing it to its historical volatility, Xunlei Ltd Adr is 1.07 times less risky than Alphabet. It trades about 0.01 of its potential returns per unit of risk. Alphabet Inc Class C is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  14,792  in Alphabet Inc Class C on January 19, 2024 and sell it today you would earn a total of  896.00  from holding Alphabet Inc Class C or generate 6.06% return on investment over 90 days.

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

Xunlei Ltd Adr  vs.  Alphabet Inc Class C

Xunlei Ltd Adr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xunlei Ltd Adr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Xunlei is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Alphabet Class C

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Alphabet may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Xunlei and Alphabet

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

The idea behind Xunlei Ltd Adr and Alphabet Inc Class C 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.