Correlation Between ScanSource and Vipshop Holdings
Can any of the company-specific risk be diversified away by investing in both ScanSource 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 ScanSource and Vipshop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and Vipshop Holdings Limited, you can compare the effects of market volatilities on ScanSource 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 ScanSource with a short position of Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Vipshop Holdings.
Diversification Opportunities for ScanSource and Vipshop Holdings
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ScanSource and Vipshop is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings and ScanSource 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 ScanSource 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 ScanSource i.e., ScanSource and Vipshop Holdings go up and down completely randomly.
Pair Corralation between ScanSource and Vipshop Holdings
Given the investment horizon of 90 days ScanSource is expected to generate 3.09 times less return on investment than Vipshop Holdings. But when comparing it to its historical volatility, ScanSource is 1.49 times less risky than Vipshop Holdings. It trades about 0.03 of its potential returns per unit of risk. Vipshop Holdings Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 815.00 in Vipshop Holdings Limited on January 24, 2024 and sell it today you would earn a total of 745.00 from holding Vipshop Holdings Limited or generate 91.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
ScanSource vs. Vipshop Holdings Limited
Performance |
| Timeline |
| ScanSource |
| Vipshop Holdings |
ScanSource and Vipshop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and Vipshop Holdings
The main advantage of trading using opposite ScanSource and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource 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.| ScanSource vs. Climb Global Solutions | ScanSource vs. Insight Enterprises | ScanSource vs. Snap One Holdings | ScanSource vs. Synnex |
| Vipshop Holdings vs. Appian Corp | Vipshop Holdings vs. Okta Inc | Vipshop Holdings vs. MongoDB | Vipshop Holdings vs. Twilio Inc |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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