Correlation Between Global E and Vipshop Holdings

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

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

Diversification Opportunities for Global E and Vipshop Holdings

-0.19

Correlation Coefficient

Global E  Vipshop Holdings

Good diversification

The 3 months correlation between Global and Vipshop is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings and Global E 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 Global E Online 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 Global E i.e., Global E and Vipshop Holdings go up and down completely randomly.

Pair Corralation between Global E and Vipshop Holdings

Given the investment horizon of 90 days Global E Online is expected to generate 1.38 times more return on investment than Vipshop Holdings. However, Global E is 1.38 times more volatile than Vipshop Holdings Limited. It trades about -0.12 of its potential returns per unit of risk. Vipshop Holdings Limited is currently generating about -0.34 per unit of risk. If you would invest  3,630  in Global E Online on February 1, 2024 and sell it today you would lose (277.00) from holding Global E Online or give up 7.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Global E Online  vs.  Vipshop Holdings Limited

Global E Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global E Online has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Vipshop Holdings

Risk-Adjusted Performance

0 of 100

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Global E and Vipshop Holdings

The main advantage of trading using opposite Global E and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global E 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 Global E Online 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.