Correlation Between Birks and Vipshop Holdings
Can any of the company-specific risk be diversified away by investing in both Birks 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 Birks and Vipshop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birks Group and Vipshop Holdings Limited, you can compare the effects of market volatilities on Birks 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 Birks with a short position of Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birks and Vipshop Holdings.
Diversification Opportunities for Birks and Vipshop Holdings
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Birks and Vipshop is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Birks Group and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings and Birks 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 Birks Group 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 Birks i.e., Birks and Vipshop Holdings go up and down completely randomly.
Pair Corralation between Birks and Vipshop Holdings
Considering the 90-day investment horizon Birks Group is expected to under-perform the Vipshop Holdings. In addition to that, Birks is 1.55 times more volatile than Vipshop Holdings Limited. It trades about -0.44 of its total potential returns per unit of risk. Vipshop Holdings Limited is currently generating about -0.12 per unit of volatility. If you would invest 1,409 in Vipshop Holdings Limited on August 26, 2024 and sell it today you would lose (85.00) from holding Vipshop Holdings Limited or give up 6.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Birks Group vs. Vipshop Holdings Limited
Performance |
| Timeline |
| Birks Group |
| Vipshop Holdings |
Birks and Vipshop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birks and Vipshop Holdings
The main advantage of trading using opposite Birks and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birks 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 Birks Group 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. JD Inc Adr | Vipshop Holdings vs. Alibaba Group Holding | Vipshop Holdings vs. Sea | Vipshop Holdings vs. Jumia Technologies AG |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |