Correlation Between Xunlei and Unisys

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

Diversification Opportunities for Xunlei and Unisys

-0.14

Correlation Coefficient

Xunlei  Unisys

Good diversification

The 3 months correlation between Xunlei and Unisys is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and Unisys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unisys 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 Unisys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unisys has no effect on the direction of Xunlei i.e., Xunlei and Unisys go up and down completely randomly.

Pair Corralation between Xunlei and Unisys

Given the investment horizon of 90 days Xunlei is expected to generate 85.25 times less return on investment than Unisys. But when comparing it to its historical volatility, Xunlei Ltd Adr is 2.36 times less risky than Unisys. It trades about 0.01 of its potential returns per unit of risk. Unisys is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  490.00  in Unisys on January 19, 2024 and sell it today you would earn a total of  63.00  from holding Unisys or generate 12.86% return on investment over 90 days.

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

Xunlei Ltd Adr  vs.  Unisys

Xunlei Ltd Adr

Risk-Adjusted Performance

0 of 100

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 comparatively stable technical and fundamental indicators, Xunlei is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Unisys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unisys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Xunlei and Unisys

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

The idea behind Xunlei Ltd Adr and Unisys 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.