Correlation Between Vipshop Holdings and JD
Can any of the company-specific risk be diversified away by investing in both Vipshop Holdings and JD 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 JD 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 JD Inc, you can compare the effects of market volatilities on Vipshop Holdings and JD 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 JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vipshop Holdings and JD.
Diversification Opportunities for Vipshop Holdings and JD
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vipshop and JD is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and JD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD 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 JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc has no effect on the direction of Vipshop Holdings i.e., Vipshop Holdings and JD go up and down completely randomly.
Pair Corralation between Vipshop Holdings and JD
Assuming the 90 days trading horizon Vipshop Holdings Limited is expected to generate 0.69 times more return on investment than JD. However, Vipshop Holdings Limited is 1.46 times less risky than JD. It trades about -0.06 of its potential returns per unit of risk. JD Inc is currently generating about -0.13 per unit of risk. If you would invest 3,966 in Vipshop Holdings Limited on August 23, 2024 and sell it today you would lose (140.00) from holding Vipshop Holdings Limited or give up 3.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vipshop Holdings Limited vs. JD Inc
Performance |
| Timeline |
| Vipshop Holdings |
| JD Inc |
Vipshop Holdings and JD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vipshop Holdings and JD
The main advantage of trading using opposite Vipshop Holdings and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vipshop Holdings position performs unexpectedly, JD 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 JD will offset losses from the drop in JD's long position.| 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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