Correlation Between VivoPower International and Electronics Fund

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

Diversification Opportunities for VivoPower International and Electronics Fund

0.61

Correlation Coefficient

VivoPower International  Electronics Fund

Poor diversification

The 3 months correlation between VivoPower and Electronics is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding VivoPower International PLC and Electronics Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronics Fund Class 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 Electronics Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronics Fund Class has no effect on the direction of VivoPower International i.e., VivoPower International and Electronics Fund go up and down completely randomly.

Pair Corralation between VivoPower International and Electronics Fund

Given the investment horizon of 90 days VivoPower International PLC is expected to generate 3.68 times more return on investment than Electronics Fund. However, VivoPower International is 3.68 times more volatile than Electronics Fund Class. It trades about 0.0 of its potential returns per unit of risk. Electronics Fund Class is currently generating about -0.08 per unit of risk. If you would invest  143.00  in VivoPower International PLC on December 24, 2024 and sell it today you would lose (25.00) from holding VivoPower International PLC or give up 17.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

VivoPower International PLC  vs.  Electronics Fund Class

VivoPower International

Risk-Adjusted Performance

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 invariable basic indicators, VivoPower International is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Electronics Fund Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electronics Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with VivoPower International and Electronics Fund

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

The idea behind VivoPower International PLC and Electronics Fund Class 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.