Correlation Between Vipshop Holdings and Kirklands

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

Diversification Opportunities for Vipshop Holdings and Kirklands

-0.44

Correlation Coefficient

Vipshop Holdings  Kirklands

Very good diversification

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

Pair Corralation between Vipshop Holdings and Kirklands

Given the investment horizon of 90 days Vipshop Holdings Limited is expected to generate 1.01 times more return on investment than Kirklands. However, Vipshop Holdings is 1.01 times more volatile than Kirklands. It trades about 0.07 of its potential returns per unit of risk. Kirklands is currently generating about -0.11 per unit of risk. If you would invest  1,381  in Vipshop Holdings Limited on November 28, 2024 and sell it today you would earn a total of  133.00  from holding Vipshop Holdings Limited or generate 9.63% 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.  Kirklands

Vipshop Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vipshop Holdings Limited are ranked lower than 5 (%) 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.

Kirklands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kirklands 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 quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Vipshop Holdings and Kirklands

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

The idea behind Vipshop Holdings Limited and Kirklands 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.