5.26 +0.08 (+1.54%) Sell

Profit booking on the minds of VIPS investors as it marginally outperforms

13 min read

VIPSHOP HOLDINGS LTD (Foreign) delivered good returns today. It grew by +1.54% to close at 5.26. During the last week it returned -6.57% and saw a maximum drawdown of -7.99% before bouncing back.

[Themes containing VIPS]

Buy-and-Hold investors in VIPS experienced a maximum drawdown of -31.3% over the last three months. It returned -16.9% during this strong down trending period. There were no long signals during this period, where the short signal generated good profits of +16.9% for investors.


VIPS has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 14 days, VIPS underperformed the SP500 index on 52% days.

During the last three months VIPS was mostly loss making and delivered on average -0.2% per day. It's best return during this period (of +17.28%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -9.55%) was on Thursday, 8 Nov, 2018. There was initially a bearish trend during this period which started on 4 Oct, 2018 and went on till 10 Oct, 2018. The trend delivered -17.19% losses to investors. This was followed by a bullish trend that started on 12 Nov, 2018 and ended on 16 Nov, 2018. This bullish trend delivered +14.62% to investors.

On monthly basis, VIPS delivered losses in more months over the last year, than profits. VIPS delivered profits less regularly than SP500 index. VIPS significantly outperformed SP500 index in Jan 2018, when it returned +32.24% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. VIPS had a longer winning streak of losing months than SP500 index. It went down in 8 straight months (from Mar 2018 to Oct 2018) during which period it delivered -110.46%. It is interesting to note that both VIPS and SP500 index significantly outperform during months when quarterly/annual results are announced.

Money is a terrible master but an excellent servant.
-- P.T. Barnum

VIPS is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant fall in VIPS's volatility from 21 Sep, 2018 to 3 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that VIPS has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

Investors trading in VIPS derivatives at this moment can consider 'Long Strangle' options strategy to receive better risk-adjusted returns.

SP500 index has more chance of extreme outcomes than VIPS. Therefore, SP500 must receive a lower allocation than VIPS in your portfolio. SP500 index usually has shorter drawdown period than VIPS.

On a general note (since you are interested in VIPS), three instruments that deserve special mention are TYHT, AMRH and RGSE. They have all outperformed the market and must be closely watched for investment opportunities.

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