Correlation Between Vipshop Holdings and Pinstripes Holdings

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

Diversification Opportunities for Vipshop Holdings and Pinstripes Holdings

-0.12

Correlation Coefficient

Vipshop Holdings  Pinstripes Holdings

Good diversification

The 3 months correlation between Vipshop and Pinstripes is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and Pinstripes Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinstripes Holdings 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 Pinstripes Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinstripes Holdings has no effect on the direction of Vipshop Holdings i.e., Vipshop Holdings and Pinstripes Holdings go up and down completely randomly.

Pair Corralation between Vipshop Holdings and Pinstripes Holdings

Given the investment horizon of 90 days Vipshop Holdings Limited is expected to generate 0.4 times more return on investment than Pinstripes Holdings. However, Vipshop Holdings Limited is 2.5 times less risky than Pinstripes Holdings. It trades about 0.07 of its potential returns per unit of risk. Pinstripes Holdings is currently generating about -0.43 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Vipshop Holdings Limited  vs.  Pinstripes Holdings

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.

Pinstripes Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinstripes Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Vipshop Holdings and Pinstripes Holdings

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

The idea behind Vipshop Holdings Limited and Pinstripes Holdings 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.