Correlation Between VivoPower International and Emeren

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

Diversification Opportunities for VivoPower International and Emeren

-0.45

Correlation Coefficient

VivoPower International  Emeren

Very good diversification

The 3 months correlation between VivoPower and Emeren is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding VivoPower International PLC and Emeren Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emeren Group 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 Emeren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emeren Group has no effect on the direction of VivoPower International i.e., VivoPower International and Emeren go up and down completely randomly.

Pair Corralation between VivoPower International and Emeren

Given the investment horizon of 90 days VivoPower International PLC is expected to generate 4.59 times more return on investment than Emeren. However, VivoPower International is 4.59 times more volatile than Emeren Group. It trades about 0.04 of its potential returns per unit of risk. Emeren Group is currently generating about 0.0 per unit of risk. If you would invest  178.00  in VivoPower International PLC on September 2, 2024 and sell it today you would lose (60.00) from holding VivoPower International PLC or give up 33.71% of portfolio value over 90 days.

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

VivoPower International PLC  vs.  Emeren Group

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 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.

Emeren Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Emeren Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Emeren may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VivoPower International and Emeren

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

The idea behind VivoPower International PLC and Emeren Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.