Correlation Between Xunlei and Servicenow

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

Diversification Opportunities for Xunlei and Servicenow

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Xunlei and Servicenow is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Limited and Servicenow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Servicenow 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 Limited are associated (or correlated) with Servicenow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Servicenow has no effect on the direction of Xunlei i.e., Xunlei and Servicenow go up and down completely randomly.

Pair Corralation between Xunlei and Servicenow

Given the investment horizon of 90 days Xunlei Limited is expected to under-perform the Servicenow. In addition to that, Xunlei is 1.56 times more volatile than Servicenow. It trades about -0.07 of its total potential returns per unit of risk. Servicenow is currently generating about 0.02 per unit of volatility. If you would invest  46,471  in Servicenow on April 5, 2022 and sell it today you would earn a total of  1,965  from holding Servicenow or generate 4.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Xunlei Limited  vs.  Servicenow

 Performance (%) 
      Timeline 
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

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 latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Servicenow Price Channel

Xunlei and Servicenow Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Xunlei and Servicenow

The main advantage of trading using opposite Xunlei and Servicenow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xunlei position performs unexpectedly, Servicenow 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 Servicenow will offset losses from the drop in Servicenow's long position.
The idea behind Xunlei Limited and Servicenow 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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