Correlation Between Cisco Systems and Xunlei

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Can any of the company-specific risk be diversified away by investing in both Cisco Systems 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 Cisco Systems and Xunlei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Xunlei Ltd Adr, you can compare the effects of market volatilities on Cisco Systems 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 Cisco Systems with a short position of Xunlei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Xunlei.

Diversification Opportunities for Cisco Systems and Xunlei

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Cisco and Xunlei is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems 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 Cisco Systems 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 Cisco Systems 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 Cisco Systems i.e., Cisco Systems and Xunlei go up and down completely randomly.

Pair Corralation between Cisco Systems and Xunlei

Given the investment horizon of 90 days Cisco Systems is expected to generate 0.33 times more return on investment than Xunlei. However, Cisco Systems is 3.07 times less risky than Xunlei. It trades about 0.18 of its potential returns per unit of risk. Xunlei Ltd Adr is currently generating about -0.01 per unit of risk. If you would invest  4,831  in Cisco Systems on December 29, 2023 and sell it today you would earn a total of  146.00  from holding Cisco Systems or generate 3.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cisco Systems  vs.  Xunlei Ltd Adr

 Performance 
       Timeline  
Cisco Systems 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Cisco Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Cisco Systems is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Xunlei Ltd Adr 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Xunlei Ltd Adr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Cisco Systems and Xunlei Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cisco Systems and Xunlei

The main advantage of trading using opposite Cisco Systems and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems 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 Cisco Systems 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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