Correlation Between Qurate Retail and Vipshop Holdings

Can any of the company-specific risk be diversified away by investing in both Qurate Retail 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 Qurate Retail and Vipshop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qurate Retail and Vipshop Holdings Limited, you can compare the effects of market volatilities on Qurate Retail 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 Qurate Retail with a short position of Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qurate Retail and Vipshop Holdings.

Diversification Opportunities for Qurate Retail and Vipshop Holdings

-0.04

Correlation Coefficient

Qurate Retail  Vipshop Holdings

Good diversification

The 3 months correlation between Qurate and Vipshop is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Qurate Retail and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings and Qurate Retail 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 Qurate Retail 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 Qurate Retail i.e., Qurate Retail and Vipshop Holdings go up and down completely randomly.

Pair Corralation between Qurate Retail and Vipshop Holdings

Assuming the 90 days horizon Qurate Retail is expected to under-perform the Vipshop Holdings. But the preferred stock apears to be less risky and, when comparing its historical volatility, Qurate Retail is 1.06 times less risky than Vipshop Holdings. The preferred stock trades about -0.05 of its potential returns per unit of risk. The Vipshop Holdings Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,328  in Vipshop Holdings Limited on December 29, 2024 and sell it today you would earn a total of  285.00  from holding Vipshop Holdings Limited or generate 21.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.16%
Values	Daily Returns

Qurate Retail  vs.  Vipshop Holdings Limited

Qurate Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qurate Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Preferred Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Vipshop Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vipshop Holdings Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Vipshop Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qurate Retail and Vipshop Holdings

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

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..