Correlation Between Hour Loop and Vipshop Holdings

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

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

Diversification Opportunities for Hour Loop and Vipshop Holdings

0.3

Correlation Coefficient

Hour Loop  Vipshop Holdings

Weak diversification

The 3 months correlation between Hour and Vipshop is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hour Loop and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings and Hour Loop 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 Hour Loop 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 Hour Loop i.e., Hour Loop and Vipshop Holdings go up and down completely randomly.

Pair Corralation between Hour Loop and Vipshop Holdings

Given the investment horizon of 90 days Hour Loop is expected to generate 2.53 times more return on investment than Vipshop Holdings. However, Hour Loop is 2.53 times more volatile than Vipshop Holdings Limited. It trades about 0.14 of its potential returns per unit of risk. Vipshop Holdings Limited is currently generating about -0.06 per unit of risk. If you would invest  101.00  in Hour Loop on February 7, 2024 and sell it today you would earn a total of  17.00  from holding Hour Loop or generate 16.83% return on investment over 90 days.

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

Hour Loop  vs.  Vipshop Holdings Limited

Hour Loop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hour Loop has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Hour Loop is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

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 comparatively stable basic indicators, Vipshop Holdings is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hour Loop and Vipshop Holdings

The main advantage of trading using opposite Hour Loop and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hour Loop 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 Hour Loop 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.