Correlation Between Vipshop Holdings and NYSE Composite

Can any of the company-specific risk be diversified away by investing in both Vipshop Holdings and NYSE Composite 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 NYSE Composite 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 NYSE Composite, you can compare the effects of market volatilities on Vipshop Holdings and NYSE Composite 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 NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vipshop Holdings and NYSE Composite.

Diversification Opportunities for Vipshop Holdings and NYSE Composite

0.15

Correlation Coefficient

Vipshop Holdings  NYSE Composite

Average diversification

The 3 months correlation between Vipshop and NYSE is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite 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 NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Vipshop Holdings i.e., Vipshop Holdings and NYSE Composite go up and down completely randomly.

Pair Corralation between Vipshop Holdings and NYSE Composite

Assuming the 90 days trading horizon Vipshop Holdings Limited is expected to under-perform the NYSE Composite. In addition to that, Vipshop Holdings is 3.48 times more volatile than NYSE Composite. It trades about -0.05 of its total potential returns per unit of risk. NYSE Composite is currently generating about 0.03 per unit of volatility. If you would invest  1,780,104  in NYSE Composite on March 6, 2024 and sell it today you would earn a total of  20,592  from holding NYSE Composite or generate 1.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Vipshop Holdings Limited  vs.  NYSE Composite