Correlation Between ASOS Plc and Vipshop Holdings
Can any of the company-specific risk be diversified away by investing in both ASOS Plc 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 ASOS Plc and Vipshop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASOS plc PK and Vipshop Holdings Limited, you can compare the effects of market volatilities on ASOS Plc 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 ASOS Plc with a short position of Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASOS Plc and Vipshop Holdings.
Diversification Opportunities for ASOS Plc and Vipshop Holdings
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ASOS and Vipshop is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding ASOS plc PK and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings and ASOS Plc 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 ASOS plc PK 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 ASOS Plc i.e., ASOS Plc and Vipshop Holdings go up and down completely randomly.
Pair Corralation between ASOS Plc and Vipshop Holdings
Assuming the 90 days horizon ASOS plc PK is expected to generate 0.9 times more return on investment than Vipshop Holdings. However, ASOS plc PK is 1.11 times less risky than Vipshop Holdings. It trades about 0.01 of its potential returns per unit of risk. Vipshop Holdings Limited is currently generating about -0.03 per unit of risk. If you would invest 475.00 in ASOS plc PK on September 1, 2024 and sell it today you would earn a total of 0.00 from holding ASOS plc PK or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
ASOS plc PK vs. Vipshop Holdings Limited
Performance |
| Timeline |
| ASOS plc PK |
| Vipshop Holdings |
ASOS Plc and Vipshop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASOS Plc and Vipshop Holdings
The main advantage of trading using opposite ASOS Plc and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASOS Plc 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.The idea behind ASOS plc PK and Vipshop Holdings 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.| Vipshop Holdings vs. PDD Holdings | Vipshop Holdings vs. JD Inc Adr | Vipshop Holdings vs. Alibaba Group Holding | Vipshop Holdings vs. Sea |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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