Correlation Between Vipshop Holdings and ScanSource
Can any of the company-specific risk be diversified away by investing in both Vipshop Holdings and ScanSource 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 ScanSource 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 ScanSource, you can compare the effects of market volatilities on Vipshop Holdings and ScanSource 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 ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vipshop Holdings and ScanSource.
Diversification Opportunities for Vipshop Holdings and ScanSource
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vipshop and ScanSource is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of Vipshop Holdings i.e., Vipshop Holdings and ScanSource go up and down completely randomly.
Pair Corralation between Vipshop Holdings and ScanSource
Given the investment horizon of 90 days Vipshop Holdings Limited is expected to under-perform the ScanSource. In addition to that, Vipshop Holdings is 1.97 times more volatile than ScanSource. It trades about -0.18 of its total potential returns per unit of risk. ScanSource is currently generating about -0.17 per unit of volatility. If you would invest 4,259 in ScanSource on January 19, 2024 and sell it today you would lose (209.00) from holding ScanSource or give up 4.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vipshop Holdings Limited vs. ScanSource
Performance |
| Timeline |
| Vipshop Holdings |
| ScanSource |
Vipshop Holdings and ScanSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vipshop Holdings and ScanSource
The main advantage of trading using opposite Vipshop Holdings and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vipshop Holdings position performs unexpectedly, ScanSource 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 ScanSource will offset losses from the drop in ScanSource's long position.| Vipshop Holdings vs. Sea | Vipshop Holdings vs. MercadoLibre | Vipshop Holdings vs. Pinduoduo | Vipshop Holdings vs. Etsy 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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