Correlation Between Amazon and Vipshop Holdings
Can any of the company-specific risk be diversified away by investing in both Amazon and Vipshop Holdings 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 Amazon and Vipshop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Vipshop Holdings Limited, you can compare the effects of market volatilities on Amazon and Vipshop Holdings 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 Amazon with a short position of Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Vipshop Holdings.
Diversification Opportunities for Amazon and Vipshop Holdings
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Amazon and Vipshop is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings and Amazon 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 Amazon Inc are associated (or correlated) with Vipshop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vipshop Holdings has no effect on the direction of Amazon i.e., Amazon and Vipshop Holdings go up and down completely randomly.
Pair Corralation between Amazon and Vipshop Holdings
Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.86 times more return on investment than Vipshop Holdings. However, Amazon Inc is 1.16 times less risky than Vipshop Holdings. It trades about 0.21 of its potential returns per unit of risk. Vipshop Holdings Limited is currently generating about -0.06 per unit of risk. If you would invest 5,273 in Amazon Inc on August 24, 2024 and sell it today you would earn a total of 492.00 from holding Amazon Inc or generate 9.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Vipshop Holdings Limited
Performance |
| Timeline |
| Amazon Inc |
| Vipshop Holdings |
Amazon and Vipshop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Vipshop Holdings
The main advantage of trading using opposite Amazon and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Vipshop Holdings 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 Vipshop Holdings will offset losses from the drop in Vipshop Holdings' long position.| Amazon vs. Fidelity National Information | Amazon vs. NXP Semiconductors NV | Amazon vs. Metalurgica Gerdau SA | Amazon vs. GP Investments |
| Vipshop Holdings vs. Alibaba Group Holding | Vipshop Holdings vs. Amazon Inc | Vipshop Holdings vs. Enjoei SA | Vipshop Holdings vs. BTG Pactual Logstica |
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 the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |