Correlation Between Vipshop Holdings and Rite Aid
Can any of the company-specific risk be diversified away by investing in both Vipshop Holdings and Rite Aid 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 Rite Aid 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 Rite Aid, you can compare the effects of market volatilities on Vipshop Holdings and Rite Aid 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 Rite Aid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vipshop Holdings and Rite Aid.
Diversification Opportunities for Vipshop Holdings and Rite Aid
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vipshop and Rite is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and Rite Aid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rite Aid 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 Rite Aid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rite Aid has no effect on the direction of Vipshop Holdings i.e., Vipshop Holdings and Rite Aid go up and down completely randomly.
Pair Corralation between Vipshop Holdings and Rite Aid
Given the investment horizon of 90 days Vipshop Holdings Limited is expected to generate 0.44 times more return on investment than Rite Aid. However, Vipshop Holdings Limited is 2.28 times less risky than Rite Aid. It trades about 0.04 of its potential returns per unit of risk. Rite Aid is currently generating about -0.14 per unit of risk. If you would invest 1,429 in Vipshop Holdings Limited on January 18, 2024 and sell it today you would earn a total of 143.00 from holding Vipshop Holdings Limited or generate 10.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 33.33% |
| Values | Daily Returns |
Vipshop Holdings Limited vs. Rite Aid
Performance |
| Timeline |
| Vipshop Holdings |
| Rite Aid |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Vipshop Holdings and Rite Aid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vipshop Holdings and Rite Aid
The main advantage of trading using opposite Vipshop Holdings and Rite Aid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vipshop Holdings position performs unexpectedly, Rite Aid 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 Rite Aid will offset losses from the drop in Rite Aid's long position.| Vipshop Holdings vs. Appian Corp | Vipshop Holdings vs. Okta Inc | Vipshop Holdings vs. MongoDB | Vipshop Holdings vs. Twilio Inc |
| Rite Aid vs. PetMed Express | Rite Aid vs. High Tide | Rite Aid vs. China Jo Jo Drugstores | Rite Aid vs. Bimi International Medical |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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