Correlation Between SunHydrogen and VivoPower International

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

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

Diversification Opportunities for SunHydrogen and VivoPower International

0.39

Correlation Coefficient

SunHydrogen  VivoPower International

Weak diversification

The 3 months correlation between SunHydrogen and VivoPower is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding SunHydrogen and VivoPower International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VivoPower International and SunHydrogen 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 SunHydrogen 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 SunHydrogen i.e., SunHydrogen and VivoPower International go up and down completely randomly.

Pair Corralation between SunHydrogen and VivoPower International

Given the investment horizon of 90 days SunHydrogen is expected to generate 0.54 times more return on investment than VivoPower International. However, SunHydrogen is 1.86 times less risky than VivoPower International. It trades about 0.04 of its potential returns per unit of risk. VivoPower International PLC is currently generating about 0.02 per unit of risk. If you would invest  2.50  in SunHydrogen on September 5, 2024 and sell it today you would earn a total of  0.12  from holding SunHydrogen or generate 4.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SunHydrogen  vs.  VivoPower International PLC

SunHydrogen

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SunHydrogen are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, SunHydrogen reported solid returns over the last few months and may actually be approaching a breakup point.

VivoPower International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VivoPower International PLC are ranked lower than 1 (%) 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.

Pair Trading with SunHydrogen and VivoPower International

The main advantage of trading using opposite SunHydrogen and VivoPower International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunHydrogen 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 SunHydrogen 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.

Check out your portfolio center.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.