Correlation Between Cisco Systems and Xunlei

Specify exactly 2 symbols:
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 Limited, 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

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Cisco and Xunlei is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Xunlei Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xunlei Limited 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 Limited 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 under-perform the Xunlei. But the stock apears to be less risky and, when comparing its historical volatility, Cisco Systems is 2.98 times less risky than Xunlei. The stock trades about -0.23 of its potential returns per unit of risk. The Xunlei Limited is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  126.00  in Xunlei Limited on April 4, 2022 and sell it today you would earn a total of  36.00  from holding Xunlei Limited or generate 28.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Cisco Systems  vs.  Xunlei Limited

 Performance (%) 
      Timeline 
Cisco Systems 
Cisco Performance
0 of 100
Over the last 90 days Cisco Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in August 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0357
Payout Ratio
0.45
Last Split Factor
2:1
Forward Annual Dividend Rate
1.52
Dividend Date
2022-07-27
Ex Dividend Date
2022-07-05
Last Split Date
2000-03-23

Cisco Price Channel

Xunlei Limited 
Xunlei Performance
0 of 100
Over the last 90 days Xunlei Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

Xunlei Price Channel

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 Limited 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 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.

Other Complementary Tools

Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Commodity Channel Index
Use Commodity Channel Index to analyze current equity momentum
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Go
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Go
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Go