Correlation Between VivoPower International and Energy Recovery

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

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

Diversification Opportunities for VivoPower International and Energy Recovery

-0.01

Correlation Coefficient

VivoPower International  Energy Recovery

Good diversification

The 3 months correlation between VivoPower and Energy is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding VivoPower International PLC and Energy Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Recovery and VivoPower International 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 VivoPower International PLC are associated (or correlated) with Energy Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Recovery has no effect on the direction of VivoPower International i.e., VivoPower International and Energy Recovery go up and down completely randomly.

Pair Corralation between VivoPower International and Energy Recovery

Given the investment horizon of 90 days VivoPower International PLC is expected to generate 3.43 times more return on investment than Energy Recovery. However, VivoPower International is 3.43 times more volatile than Energy Recovery. It trades about 0.07 of its potential returns per unit of risk. Energy Recovery is currently generating about -0.08 per unit of risk. If you would invest  344.00  in VivoPower International PLC on May 4, 2025 and sell it today you would earn a total of  47.00  from holding VivoPower International PLC or generate 13.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

VivoPower International PLC  vs.  Energy Recovery

VivoPower International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VivoPower International PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VivoPower International reported solid returns over the last few months and may actually be approaching a breakup point.

Energy Recovery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Energy Recovery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in September 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with VivoPower International and Energy Recovery

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

The idea behind VivoPower International PLC and Energy Recovery 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.