Correlation Between Global X and Vipshop Holdings

Can any of the company-specific risk be diversified away by investing in both Global X 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 X 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 X Funds and Vipshop Holdings Limited, you can compare the effects of market volatilities on Global X 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 X with a short position of Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Vipshop Holdings.

Diversification Opportunities for Global X and Vipshop Holdings

0.5

Correlation Coefficient

Global X  Vipshop Holdings

Very weak diversification

The 3 months correlation between Global and Vipshop is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds 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 X 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 X Funds 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 X i.e., Global X and Vipshop Holdings go up and down completely randomly.

Pair Corralation between Global X and Vipshop Holdings

Given the investment horizon of 90 days Global X Funds is expected to generate 0.42 times more return on investment than Vipshop Holdings. However, Global X Funds is 2.4 times less risky than Vipshop Holdings. It trades about -0.05 of its potential returns per unit of risk. Vipshop Holdings Limited is currently generating about -0.03 per unit of risk. If you would invest  3,306  in Global X Funds on January 26, 2024 and sell it today you would lose (32.00) from holding Global X Funds or give up 0.97% of portfolio value over 90 days.

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

Global X Funds  vs.  Vipshop Holdings Limited

Global X Funds

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent essential indicators, Global X exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vipshop Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vipshop Holdings Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 X and Vipshop Holdings

The main advantage of trading using opposite Global X and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 X Funds 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.