Correlation Between Vipshop Holdings and Gap,

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

Diversification Opportunities for Vipshop Holdings and Gap,

-0.55

Correlation Coefficient

Vipshop Holdings  Gap,

Excellent diversification

The 3 months correlation between Vipshop and Gap, is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, 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 Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of Vipshop Holdings i.e., Vipshop Holdings and Gap, go up and down completely randomly.

Pair Corralation between Vipshop Holdings and Gap,

Given the investment horizon of 90 days Vipshop Holdings Limited is expected to generate 1.46 times more return on investment than Gap,. However, Vipshop Holdings is 1.46 times more volatile than The Gap,. It trades about 0.07 of its potential returns per unit of risk. The Gap, is currently generating about 0.0 per unit of risk. If you would invest  1,314  in Vipshop Holdings Limited on September 27, 2024 and sell it today you would earn a total of  49.00  from holding Vipshop Holdings Limited or generate 3.73% return on investment over 90 days.

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

Vipshop Holdings Limited  vs.  The Gap,

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Gap,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Gap, reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vipshop Holdings and Gap,

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

The idea behind Vipshop Holdings Limited and The Gap, 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.