Correlation Between Vipshop Holdings and Sally Beauty
Can any of the company-specific risk be diversified away by investing in both Vipshop Holdings and Sally Beauty 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 Sally Beauty 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 Sally Beauty Holdings, you can compare the effects of market volatilities on Vipshop Holdings and Sally Beauty 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 Sally Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vipshop Holdings and Sally Beauty.
Diversification Opportunities for Vipshop Holdings and Sally Beauty
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vipshop and Sally is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and Sally Beauty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sally Beauty Holdings 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 Sally Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sally Beauty Holdings has no effect on the direction of Vipshop Holdings i.e., Vipshop Holdings and Sally Beauty go up and down completely randomly.
Pair Corralation between Vipshop Holdings and Sally Beauty
Given the investment horizon of 90 days Vipshop Holdings Limited is expected to generate 0.92 times more return on investment than Sally Beauty. However, Vipshop Holdings Limited is 1.09 times less risky than Sally Beauty. It trades about 0.03 of its potential returns per unit of risk. Sally Beauty Holdings is currently generating about -0.02 per unit of risk. If you would invest 1,367 in Vipshop Holdings Limited on January 20, 2024 and sell it today you would earn a total of 148.00 from holding Vipshop Holdings Limited or generate 10.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Vipshop Holdings Limited vs. Sally Beauty Holdings
Performance |
Timeline |
Vipshop Holdings |
Sally Beauty Holdings |
Vipshop Holdings and Sally Beauty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vipshop Holdings and Sally Beauty
The main advantage of trading using opposite Vipshop Holdings and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vipshop Holdings position performs unexpectedly, Sally Beauty 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 Sally Beauty will offset losses from the drop in Sally Beauty's long position.Vipshop Holdings vs. Shoe Carnival | Vipshop Holdings vs. Hibbett Sports | Vipshop Holdings vs. Citi Trends | Vipshop Holdings vs. Zumiez Inc |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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