Correlation Between SentinelOne and Vipshop Holdings

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

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

Diversification Opportunities for SentinelOne and Vipshop Holdings

0.05

Correlation Coefficient

SentinelOne  Vipshop Holdings

Significant diversification

The 3 months correlation between SentinelOne and Vipshop is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings and SentinelOne 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 SentinelOne 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 SentinelOne i.e., SentinelOne and Vipshop Holdings go up and down completely randomly.

Pair Corralation between SentinelOne and Vipshop Holdings

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Vipshop Holdings. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 1.13 times less risky than Vipshop Holdings. The stock trades about -0.33 of its potential returns per unit of risk. The Vipshop Holdings Limited is currently generating about -0.28 of returns per unit of risk over similar time horizon. If you would invest  1,768  in Vipshop Holdings Limited on January 21, 2024 and sell it today you would lose (252.00) from holding Vipshop Holdings Limited or give up 14.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

SentinelOne  vs.  Vipshop Holdings Limited

SentinelOne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Vipshop Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vipshop Holdings Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Vipshop Holdings may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with SentinelOne and Vipshop Holdings

The main advantage of trading using opposite SentinelOne and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne 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 SentinelOne 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.