Correlation Between Vipshop Holdings and Liquidity Services
Can any of the company-specific risk be diversified away by investing in both Vipshop Holdings and Liquidity Services 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 Liquidity Services 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 Liquidity Services, you can compare the effects of market volatilities on Vipshop Holdings and Liquidity Services 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 Liquidity Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vipshop Holdings and Liquidity Services.
Diversification Opportunities for Vipshop Holdings and Liquidity Services
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vipshop and Liquidity is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and Liquidity Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liquidity Services 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 Liquidity Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liquidity Services has no effect on the direction of Vipshop Holdings i.e., Vipshop Holdings and Liquidity Services go up and down completely randomly.
Pair Corralation between Vipshop Holdings and Liquidity Services
Given the investment horizon of 90 days Vipshop Holdings is expected to generate 9.52 times less return on investment than Liquidity Services. But when comparing it to its historical volatility, Vipshop Holdings Limited is 1.35 times less risky than Liquidity Services. It trades about 0.03 of its potential returns per unit of risk. Liquidity Services is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,141 in Liquidity Services on October 20, 2024 and sell it today you would earn a total of 315.00 from holding Liquidity Services or generate 10.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vipshop Holdings Limited vs. Liquidity Services
Performance |
| Timeline |
| Vipshop Holdings |
| Liquidity Services |
Vipshop Holdings and Liquidity Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vipshop Holdings and Liquidity Services
The main advantage of trading using opposite Vipshop Holdings and Liquidity Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vipshop Holdings position performs unexpectedly, Liquidity Services 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 Liquidity Services will offset losses from the drop in Liquidity Services' long position.| Vipshop Holdings vs. PDD Holdings | Vipshop Holdings vs. JD Inc Adr | Vipshop Holdings vs. Alibaba Group Holding | Vipshop Holdings vs. Global E Online |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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