Correlation Between VivoPower International and Orbit International

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

Diversification Opportunities for VivoPower International and Orbit International

0.63

Correlation Coefficient

VivoPower International  Orbit International

Poor diversification

The 3 months correlation between VivoPower and Orbit is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding VivoPower International PLC and Orbit International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbit International 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 Orbit International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbit International has no effect on the direction of VivoPower International i.e., VivoPower International and Orbit International go up and down completely randomly.

Pair Corralation between VivoPower International and Orbit International

Given the investment horizon of 90 days VivoPower International PLC is expected to generate 13.31 times more return on investment than Orbit International. However, VivoPower International is 13.31 times more volatile than Orbit International. It trades about 0.04 of its potential returns per unit of risk. Orbit International is currently generating about 0.15 per unit of risk. If you would invest  260.00  in VivoPower International PLC on September 15, 2024 and sell it today you would lose (135.00) from holding VivoPower International PLC or give up 51.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.86%
Values	Daily Returns

VivoPower International PLC  vs.  Orbit International

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 relatively weak basic indicators, VivoPower International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Orbit International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orbit International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Orbit International is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VivoPower International and Orbit International

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

The idea behind VivoPower International PLC and Orbit International 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.