Correlation Between Vipshop Holdings and Coupang LLC

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

Diversification Opportunities for Vipshop Holdings and Coupang LLC

0.44

Correlation Coefficient

Vipshop Holdings  Coupang LLC

Very weak diversification

The 3 months correlation between Vipshop and Coupang is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC 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 Coupang LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coupang LLC has no effect on the direction of Vipshop Holdings i.e., Vipshop Holdings and Coupang LLC go up and down completely randomly.

Pair Corralation between Vipshop Holdings and Coupang LLC

Given the investment horizon of 90 days Vipshop Holdings is expected to generate 3.81 times less return on investment than Coupang LLC. In addition to that, Vipshop Holdings is 1.19 times more volatile than Coupang LLC. It trades about 0.01 of its total potential returns per unit of risk. Coupang LLC is currently generating about 0.03 per unit of volatility. If you would invest  1,700  in Coupang LLC on October 9, 2024 and sell it today you would earn a total of  523.00  from holding Coupang LLC or generate 30.76% return on investment over 90 days.

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

Vipshop Holdings Limited  vs.  Coupang LLC

Vipshop Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vipshop Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Coupang LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coupang LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Vipshop Holdings and Coupang LLC

The main advantage of trading using opposite Vipshop Holdings and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vipshop Holdings position performs unexpectedly, Coupang LLC 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 Coupang LLC will offset losses from the drop in Coupang LLC's long position.

The idea behind Vipshop Holdings Limited and Coupang LLC 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..