Correlation Between Xunlei and Aeye

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

Diversification Opportunities for Xunlei and Aeye

-0.06

Correlation Coefficient

Xunlei  Aeye

Good diversification

The 3 months correlation between Xunlei and Aeye is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and Aeye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeye Inc 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 Aeye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeye Inc has no effect on the direction of Xunlei i.e., Xunlei and Aeye go up and down completely randomly.

Pair Corralation between Xunlei and Aeye

Given the investment horizon of 90 days Xunlei Ltd Adr is expected to generate 0.93 times more return on investment than Aeye. However, Xunlei Ltd Adr is 1.07 times less risky than Aeye. It trades about -0.07 of its potential returns per unit of risk. Aeye Inc is currently generating about -0.17 per unit of risk. If you would invest  198.00  in Xunlei Ltd Adr on August 20, 2024 and sell it today you would lose (14.00) from holding Xunlei Ltd Adr or give up 7.07% of portfolio value over 90 days.

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

Xunlei Ltd Adr  vs.  Aeye Inc

Xunlei Ltd Adr

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xunlei Ltd Adr are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Xunlei unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aeye Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeye Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Xunlei and Aeye

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

The idea behind Xunlei Ltd Adr and Aeye Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.