Correlation Between Vipshop Holdings and Amazon
Can any of the company-specific risk be diversified away by investing in both Vipshop Holdings and Amazon 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 Amazon 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 Amazon Inc, you can compare the effects of market volatilities on Vipshop Holdings and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vipshop Holdings and Amazon.
Diversification Opportunities for Vipshop Holdings and Amazon
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vipshop and Amazon is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Vipshop Holdings i.e., Vipshop Holdings and Amazon go up and down completely randomly.
Pair Corralation between Vipshop Holdings and Amazon
Given the investment horizon of 90 days Vipshop Holdings Limited is expected to under-perform the Amazon. But the stock apears to be less risky and, when comparing its historical volatility, Vipshop Holdings Limited is 1.15 times less risky than Amazon. The stock trades about -0.18 of its potential returns per unit of risk. The Amazon Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 18,839 in Amazon Inc on August 27, 2024 and sell it today you would earn a total of 873.00 from holding Amazon Inc or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vipshop Holdings Limited vs. Amazon Inc
Performance |
| Timeline |
| Vipshop Holdings |
| Amazon Inc |
Vipshop Holdings and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vipshop Holdings and Amazon
The main advantage of trading using opposite Vipshop Holdings and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vipshop Holdings position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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