Correlation Between Marchex and Xunlei

Can any of the company-specific risk be diversified away by investing in both Marchex 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 Marchex and Xunlei into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marchex and Xunlei Ltd Adr, you can compare the effects of market volatilities on Marchex 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 Marchex with a short position of Xunlei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marchex and Xunlei.

Diversification Opportunities for Marchex and Xunlei

0.29

Correlation Coefficient

Marchex  Xunlei

Modest diversification

The 3 months correlation between Marchex and Xunlei is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Marchex 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 Marchex 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 Marchex 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 Marchex i.e., Marchex and Xunlei go up and down completely randomly.

Pair Corralation between Marchex and Xunlei

Given the investment horizon of 90 days Marchex is expected to generate 1.68 times less return on investment than Xunlei. But when comparing it to its historical volatility, Marchex is 1.19 times less risky than Xunlei. It trades about 0.08 of its potential returns per unit of risk. Xunlei Ltd Adr is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  158.00  in Xunlei Ltd Adr on September 14, 2024 and sell it today you would earn a total of  51.80  from holding Xunlei Ltd Adr or generate 32.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Marchex  vs.  Xunlei Ltd Adr

Marchex

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marchex are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical indicators, Marchex showed solid returns over the last few months and may actually be approaching a breakup point.

Xunlei Ltd Adr

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xunlei Ltd Adr are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Xunlei unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marchex and Xunlei

The main advantage of trading using opposite Marchex and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marchex 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 Marchex 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..