Correlation Between Naspers and Xunlei

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

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

Diversification Opportunities for Naspers and Xunlei

0.57

Correlation Coefficient

Naspers  Xunlei

Very weak diversification

The 3 months correlation between Naspers and Xunlei is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Naspers Ltd ADR 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 Naspers 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 Naspers Ltd ADR 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 Naspers i.e., Naspers and Xunlei go up and down completely randomly.

Pair Corralation between Naspers and Xunlei

If you would invest  162.00  in Xunlei Ltd Adr on March 3, 2024 and sell it today you would earn a total of  19.00  from holding Xunlei Ltd Adr or generate 11.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Naspers Ltd ADR  vs.  Xunlei Ltd Adr

Naspers Ltd ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Naspers Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Naspers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Xunlei Ltd Adr

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xunlei Ltd Adr are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Xunlei unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Naspers and Xunlei

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

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.