Correlation Between VHAI and VivoPower International

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

By analyzing existing cross correlation between VHAI and VivoPower International PLC, you can compare the effects of market volatilities on VHAI and VivoPower International 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 VHAI with a short position of VivoPower International. Check out your portfolio center. Please also check ongoing floating volatility patterns of VHAI and VivoPower International.

Diversification Opportunities for VHAI and VivoPower International

0.81

Correlation Coefficient

VHAI  VivoPower International

Very poor diversification

The 3 months correlation between VHAI and VivoPower is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding VHAI and VivoPower International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VivoPower International and VHAI 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 VHAI are associated (or correlated) with VivoPower International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VivoPower International has no effect on the direction of VHAI i.e., VHAI and VivoPower International go up and down completely randomly.

Pair Corralation between VHAI and VivoPower International

Given the investment horizon of 90 days VHAI is expected to generate 1.15 times more return on investment than VivoPower International. However, VHAI is 1.15 times more volatile than VivoPower International PLC. It trades about 0.05 of its potential returns per unit of risk. VivoPower International PLC is currently generating about -0.23 per unit of risk. If you would invest  0.82  in VHAI on July 18, 2024 and sell it today you would earn a total of  0.00  from holding VHAI or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	21.74%
Values	Daily Returns

VHAI  vs.  VivoPower International PLC

VHAI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VHAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in November 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

VivoPower International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VivoPower International PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in November 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with VHAI and VivoPower International

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

The idea behind VHAI and VivoPower International PLC 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 Global Correlations module to find global opportunities by holding instruments from different markets.