Correlation Between VivoPower International and Enerkon Solar
Can any of the company-specific risk be diversified away by investing in both VivoPower International and Enerkon Solar 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 Enerkon Solar 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 Enerkon Solar International, you can compare the effects of market volatilities on VivoPower International and Enerkon Solar 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 Enerkon Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of VivoPower International and Enerkon Solar.
Diversification Opportunities for VivoPower International and Enerkon Solar
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VivoPower and Enerkon is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding VivoPower International PLC and Enerkon Solar International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerkon Solar Intern 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 Enerkon Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerkon Solar Intern has no effect on the direction of VivoPower International i.e., VivoPower International and Enerkon Solar go up and down completely randomly.
Pair Corralation between VivoPower International and Enerkon Solar
Given the investment horizon of 90 days VivoPower International is expected to generate 4.66 times less return on investment than Enerkon Solar. But when comparing it to its historical volatility, VivoPower International PLC is 2.1 times less risky than Enerkon Solar. It trades about 0.04 of its potential returns per unit of risk. Enerkon Solar International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3.02 in Enerkon Solar International on September 12, 2024 and sell it today you would lose (2.99) from holding Enerkon Solar International or give up 99.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
VivoPower International PLC vs. Enerkon Solar International
Performance |
| Timeline |
| VivoPower International |
| Enerkon Solar Intern |
VivoPower International and Enerkon Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VivoPower International and Enerkon Solar
The main advantage of trading using opposite VivoPower International and Enerkon Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VivoPower International position performs unexpectedly, Enerkon Solar 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 Enerkon Solar will offset losses from the drop in Enerkon Solar's long position.| VivoPower International vs. Emeren Group | VivoPower International vs. Tigo Energy | VivoPower International vs. Sunrun Inc | VivoPower International vs. Sunnova Energy International |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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