Correlation Between Vipshop Holdings and LKQ
Can any of the company-specific risk be diversified away by investing in both Vipshop Holdings and LKQ 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 LKQ 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 LKQ Corporation, you can compare the effects of market volatilities on Vipshop Holdings and LKQ 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 LKQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vipshop Holdings and LKQ.
Diversification Opportunities for Vipshop Holdings and LKQ
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vipshop and LKQ is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and LKQ Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LKQ Corporation 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 LKQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LKQ Corporation has no effect on the direction of Vipshop Holdings i.e., Vipshop Holdings and LKQ go up and down completely randomly.
Pair Corralation between Vipshop Holdings and LKQ
Given the investment horizon of 90 days Vipshop Holdings Limited is expected to under-perform the LKQ. In addition to that, Vipshop Holdings is 1.42 times more volatile than LKQ Corporation. It trades about -0.18 of its total potential returns per unit of risk. LKQ Corporation is currently generating about 0.21 per unit of volatility. If you would invest 3,747 in LKQ Corporation on August 27, 2024 and sell it today you would earn a total of 229.00 from holding LKQ Corporation or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vipshop Holdings Limited vs. LKQ Corp.
Performance |
| Timeline |
| Vipshop Holdings |
| LKQ Corporation |
Vipshop Holdings and LKQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vipshop Holdings and LKQ
The main advantage of trading using opposite Vipshop Holdings and LKQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vipshop Holdings position performs unexpectedly, LKQ 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 LKQ will offset losses from the drop in LKQ'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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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