Correlation Between Dun Bradstreet and Vipshop Holdings

Can any of the company-specific risk be diversified away by investing in both Dun Bradstreet and Vipshop Holdings 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 Dun Bradstreet and Vipshop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dun Bradstreet Holdings and Vipshop Holdings Limited, you can compare the effects of market volatilities on Dun Bradstreet and Vipshop Holdings 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 Dun Bradstreet with a short position of Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dun Bradstreet and Vipshop Holdings.

Diversification Opportunities for Dun Bradstreet and Vipshop Holdings

-0.38

Correlation Coefficient

Dun Bradstreet  Vipshop Holdings

Very good diversification

The 3 months correlation between Dun and Vipshop is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dun Bradstreet Holdings and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings and Dun Bradstreet 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 Dun Bradstreet Holdings are associated (or correlated) with Vipshop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vipshop Holdings has no effect on the direction of Dun Bradstreet i.e., Dun Bradstreet and Vipshop Holdings go up and down completely randomly.

Pair Corralation between Dun Bradstreet and Vipshop Holdings

Considering the 90-day investment horizon Dun Bradstreet Holdings is expected to under-perform the Vipshop Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Dun Bradstreet Holdings is 1.94 times less risky than Vipshop Holdings. The stock trades about -0.25 of its potential returns per unit of risk. The Vipshop Holdings Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,602  in Vipshop Holdings Limited on January 24, 2024 and sell it today you would lose (42.00) from holding Vipshop Holdings Limited or give up 2.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Dun Bradstreet Holdings  vs.  Vipshop Holdings Limited

Dun Bradstreet Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dun Bradstreet Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Vipshop Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vipshop Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vipshop Holdings is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dun Bradstreet and Vipshop Holdings

The main advantage of trading using opposite Dun Bradstreet and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dun Bradstreet position performs unexpectedly, Vipshop Holdings 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 Vipshop Holdings will offset losses from the drop in Vipshop Holdings' long position.

The idea behind Dun Bradstreet Holdings and Vipshop Holdings Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.