Correlation Between Xunlei and Workday

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

Diversification Opportunities for Xunlei and Workday

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Xunlei and Workday is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Limited and Workday in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workday 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 Workday. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workday has no effect on the direction of Xunlei i.e., Xunlei and Workday go up and down completely randomly.

Pair Corralation between Xunlei and Workday

Given the investment horizon of 90 days Xunlei Limited is expected to generate 1.21 times more return on investment than Workday. However, Xunlei is 1.21 times more volatile than Workday. It trades about 0.33 of its potential returns per unit of risk. Workday is currently generating about -0.12 per unit of risk. If you would invest  128.00  in Xunlei Limited on April 8, 2022 and sell it today you would earn a total of  35.00  from holding Xunlei Limited or generate 27.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Xunlei Limited  vs.  Workday

 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 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 
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 weak 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 and Workday Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Xunlei and Workday

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

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