Correlation Between Servicenow and Xunlei

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

Diversification Opportunities for Servicenow and Xunlei

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Servicenow and Xunlei is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Servicenow and Xunlei Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xunlei Limited and Servicenow 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 Servicenow 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 Servicenow i.e., Servicenow and Xunlei go up and down completely randomly.

Pair Corralation between Servicenow and Xunlei

Considering the 90-day investment horizon Servicenow is expected to generate 0.46 times more return on investment than Xunlei. However, Servicenow is 2.19 times less risky than Xunlei. It trades about 0.03 of its potential returns per unit of risk. Xunlei Limited is currently generating about 0.0 per unit of risk. If you would invest  42,356  in Servicenow on April 6, 2022 and sell it today you would earn a total of  7,237  from holding Servicenow or generate 17.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Servicenow  vs.  Xunlei Limited

 Performance (%) 
      Timeline 
Servicenow 
Servicenow Performance
0 of 100
Over the last 90 days Servicenow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Servicenow is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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

Xunlei Price Channel

Servicenow and Xunlei Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Servicenow and Xunlei

The main advantage of trading using opposite Servicenow and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Servicenow 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 Servicenow 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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