Correlation Between Uber Technologies and Xunlei

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

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

Diversification Opportunities for Uber Technologies and Xunlei

0.08

Correlation Coefficient

Uber Technologies  Xunlei

Significant diversification

The 3 months correlation between Uber and Xunlei is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies 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 Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Xunlei go up and down completely randomly.

Pair Corralation between Uber Technologies and Xunlei

Given the investment horizon of 90 days Uber Technologies is expected to generate 0.79 times more return on investment than Xunlei. However, Uber Technologies is 1.27 times less risky than Xunlei. It trades about 0.05 of its potential returns per unit of risk. Xunlei Ltd Adr is currently generating about 0.02 per unit of risk. If you would invest  4,657  in Uber Technologies on September 12, 2024 and sell it today you would earn a total of  1,839  from holding Uber Technologies or generate 39.49% return on investment over 90 days.

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

Uber Technologies  vs.  Xunlei Ltd Adr

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Uber Technologies is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

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 Uber Technologies and Xunlei

The main advantage of trading using opposite Uber Technologies and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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 Uber Technologies 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.