Correlation Between Vipshop Holdings and China Resources
Can any of the company-specific risk be diversified away by investing in both Vipshop Holdings and China Resources 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 China Resources 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 China Resources Land, you can compare the effects of market volatilities on Vipshop Holdings and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vipshop Holdings and China Resources.
Diversification Opportunities for Vipshop Holdings and China Resources
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vipshop and China is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and China Resources Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Land 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Land has no effect on the direction of Vipshop Holdings i.e., Vipshop Holdings and China Resources go up and down completely randomly.
Pair Corralation between Vipshop Holdings and China Resources
Given the investment horizon of 90 days Vipshop Holdings is expected to generate 2.52 times less return on investment than China Resources. But when comparing it to its historical volatility, Vipshop Holdings Limited is 1.53 times less risky than China Resources. It trades about 0.07 of its potential returns per unit of risk. China Resources Land is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 265.00 in China Resources Land on August 28, 2024 and sell it today you would earn a total of 78.00 from holding China Resources Land or generate 29.43% 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. China Resources Land
Performance |
| Timeline |
| Vipshop Holdings |
| China Resources Land |
Vipshop Holdings and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vipshop Holdings and China Resources
The main advantage of trading using opposite Vipshop Holdings and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vipshop Holdings position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| Vipshop Holdings vs. JD Inc Adr | Vipshop Holdings vs. Alibaba Group Holding | Vipshop Holdings vs. Sea | Vipshop Holdings vs. Jumia Technologies AG |
| China Resources vs. Sun Hung Kai | China Resources vs. China Overseas Land | China Resources vs. EGRNF | China Resources vs. Sino Land Co |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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