Correlation Between Workday and Xunlei

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

Diversification Opportunities for Workday and Xunlei

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Workday and Xunlei is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Workday and Xunlei Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xunlei Limited and Workday 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 Workday 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 Workday i.e., Workday and Xunlei go up and down completely randomly.

Pair Corralation between Workday and Xunlei

Given the investment horizon of 90 days Workday is expected to generate 0.53 times more return on investment than Xunlei. However, Workday is 1.87 times less risky than Xunlei. It trades about -0.06 of its potential returns per unit of risk. Xunlei Limited is currently generating about -0.07 per unit of risk. If you would invest  22,907  in Workday on April 6, 2022 and sell it today you would lose (8,270)  from holding Workday or give up 36.1% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Workday  vs.  Xunlei Limited

 Performance (%) 
      Timeline 
Workday 
Workday Performance
0 of 100
Over the last 90 days Workday has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in August 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Workday 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

Workday and Xunlei Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Workday and Xunlei

The main advantage of trading using opposite Workday and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workday 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 Workday 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 Shere Portfolio module to track or share privately all of your investments from the convenience of any device.

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