Correlation Between Vipshop Holdings and EBay
Can any of the company-specific risk be diversified away by investing in both Vipshop Holdings and EBay 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 Vipshop Holdings and EBay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vipshop Holdings Limited and eBay Inc, you can compare the effects of market volatilities on Vipshop Holdings and EBay 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 Vipshop Holdings with a short position of EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vipshop Holdings and EBay.
Diversification Opportunities for Vipshop Holdings and EBay
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vipshop and EBay is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc and Vipshop Holdings 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 Vipshop Holdings Limited are associated (or correlated) with EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Vipshop Holdings i.e., Vipshop Holdings and EBay go up and down completely randomly.
Pair Corralation between Vipshop Holdings and EBay
Assuming the 90 days trading horizon Vipshop Holdings Limited is expected to under-perform the EBay. In addition to that, Vipshop Holdings is 1.35 times more volatile than eBay Inc. It trades about -0.13 of its total potential returns per unit of risk. eBay Inc is currently generating about 0.09 per unit of volatility. If you would invest 17,732 in eBay Inc on August 30, 2024 and sell it today you would earn a total of 1,213 from holding eBay Inc or generate 6.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vipshop Holdings Limited vs. eBay Inc
Performance |
| Timeline |
| Vipshop Holdings |
| eBay Inc |
Vipshop Holdings and EBay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vipshop Holdings and EBay
The main advantage of trading using opposite Vipshop Holdings and EBay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vipshop Holdings position performs unexpectedly, EBay 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 EBay will offset losses from the drop in EBay's long position.| Vipshop Holdings vs. Deutsche Bank Aktiengesellschaft | Vipshop Holdings vs. Bank of America | Vipshop Holdings vs. Lloyds Banking Group | Vipshop Holdings vs. Spotify Technology SA |
| EBay vs. Sumitomo Mitsui Financial | EBay vs. Capital One Financial | EBay vs. Marvell Technology | EBay vs. Bank of America |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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