Correlation Between Vipshop Holdings and Amazon

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

Diversification Opportunities for Vipshop Holdings and Amazon

-0.23

Correlation Coefficient

Vipshop Holdings  Amazon

Very good diversification

The 3 months correlation between Vipshop and Amazon is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Vipshop Holdings i.e., Vipshop Holdings and Amazon go up and down completely randomly.

Pair Corralation between Vipshop Holdings and Amazon

Given the investment horizon of 90 days Vipshop Holdings Limited is expected to generate 1.13 times more return on investment than Amazon. However, Vipshop Holdings is 1.13 times more volatile than Amazon Inc. It trades about 0.01 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.08 per unit of risk. If you would invest  1,268  in Vipshop Holdings Limited on January 12, 2025 and sell it today you would lose (12.00) from holding Vipshop Holdings Limited or give up 0.95% of portfolio value over 90 days.

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

Vipshop Holdings Limited  vs.  Amazon Inc

Vipshop Holdings

Risk-Adjusted Performance

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc 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 very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Vipshop Holdings and Amazon

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

The idea behind Vipshop Holdings Limited and Amazon Inc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.