Correlation Between Xunlei and Microchip Technology

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

Diversification Opportunities for Xunlei and Microchip Technology

-0.31

Correlation Coefficient

Xunlei  Microchip Technology

Very good diversification

The 3 months correlation between Xunlei and Microchip is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and Microchip Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology 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 Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Xunlei i.e., Xunlei and Microchip Technology go up and down completely randomly.

Pair Corralation between Xunlei and Microchip Technology

Given the investment horizon of 90 days Xunlei Ltd Adr is expected to generate 2.37 times more return on investment than Microchip Technology. However, Xunlei is 2.37 times more volatile than Microchip Technology. It trades about 0.01 of its potential returns per unit of risk. Microchip Technology is currently generating about 0.0 per unit of risk. If you would invest  469.00  in Xunlei Ltd Adr on May 13, 2025 and sell it today you would lose (25.00) from holding Xunlei Ltd Adr or give up 5.33% 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.  Microchip Technology

Xunlei Ltd Adr

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xunlei Ltd Adr are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Xunlei is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Microchip Technology

Risk-Adjusted Performance

Weakest

Over the last 90 days Microchip Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Microchip Technology 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 Microchip Technology

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

The idea behind Xunlei Ltd Adr and Microchip Technology 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.