Correlation Between Vipshop Holdings and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Vipshop Holdings and Alibaba Group 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 Alibaba Group 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 Alibaba Group Holding, you can compare the effects of market volatilities on Vipshop Holdings and Alibaba Group 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 Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vipshop Holdings and Alibaba Group.
Diversification Opportunities for Vipshop Holdings and Alibaba Group
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vipshop and Alibaba is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding 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 Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Vipshop Holdings i.e., Vipshop Holdings and Alibaba Group go up and down completely randomly.
Pair Corralation between Vipshop Holdings and Alibaba Group
Given the investment horizon of 90 days Vipshop Holdings Limited is expected to generate 1.0 times more return on investment than Alibaba Group. However, Vipshop Holdings is 1.0 times more volatile than Alibaba Group Holding. It trades about -0.09 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.28 per unit of risk. If you would invest 1,413 in Vipshop Holdings Limited on August 24, 2024 and sell it today you would lose (65.00) from holding Vipshop Holdings Limited or give up 4.6% 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. Alibaba Group Holding
Performance |
| Timeline |
| Vipshop Holdings |
| Alibaba Group Holding |
Vipshop Holdings and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vipshop Holdings and Alibaba Group
The main advantage of trading using opposite Vipshop Holdings and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vipshop Holdings position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group'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 |
| Alibaba Group vs. PDD Holdings | Alibaba Group vs. MercadoLibre | Alibaba Group vs. JD Inc Adr | Alibaba Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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