4.4 -0.15 (-3.3%) Sell

XNET is a falling knife, continues to bleed every investor trying to catch it

13 min read

XUNLEI LTD (Foreign) significantly underperformed today. It fell by -3.3% to close at 4.4. It's recent 5 day performance has been -2.15%, -0.64%, -3.11%, -1.43% and -4.85%.

[Themes containing XNET]

XNET showed a strong bearish trend over the last 3 months. During this period XNET fell by -51.97% and saw a maximum drawdown of -51.97%. There were 3 short signals during this period that returned a cumulative of +49.79% to investors.


XNET has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 2 Aug, 2017 to 24 Nov, 2017. Over the last 2 years 11 months and 10 days, XNET underperformed the SP500 index on 52% days.

During the last three months XNET was mostly loss making and delivered on average -1.08% per day. It's best return during this period (of +6.64%) was on Friday, 12 Oct, 2018. While it's worst loss in the same period (of -12.66%) was on Wednesday, 14 Nov, 2018. The longest stort-term trend during this period was 8 losing days, which started on 21 Sep, 2018 and ended on 2 Oct, 2018. This bearish trend lost -26.58% of investor capital.

During the last year XNET had 1 profitable months and 11 loss making months. XNET returned profits in fewer months than SP500 index. XNET significantly outperformed SP500 index in Apr 2018, when it returned +30.82% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. XNET had a longer winning streak of losing months than SP500 index. It went down in 8 straight months (from May 2018 to Dec 2018) during which period it delivered -100.7%. It is interesting to note that both XNET and SP500 index significantly outperform during months when quarterly/annual results are announced.

The hardest thing to understand in the world is the income tax.
-- Albert Einstein

XNET is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant fall in XNET's volatility from 18 Sep, 2018 to 13 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that XNET has significant negative skewness in it's return distribution. This indicates that XNET is very risky for short-term investment and can significantly underperform for long durations.

Investors trading in XNET derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

SP500 index has more chance of extreme outcomes than XNET. Therefore, SP500 must receive a lower allocation than XNET in your portfolio. SP500 index usually has shorter drawdown period than XNET.

Based on your interest in XNET you may find it interesting to know that AMD, LULU and ABMD are mid caps that have all shown remarkable performance and qualify to be on every investor's watchlist.

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