Correlation Between TGI Solar and VivoPower International

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

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

Diversification Opportunities for TGI Solar and VivoPower International

0.61

Correlation Coefficient

TGI Solar  VivoPower International

Poor diversification

The 3 months correlation between TGI and VivoPower is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding TGI Solar Power and VivoPower International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VivoPower International and TGI Solar 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 TGI Solar Power 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 TGI Solar i.e., TGI Solar and VivoPower International go up and down completely randomly.

Pair Corralation between TGI Solar and VivoPower International

Given the investment horizon of 90 days TGI Solar Power is expected to under-perform the VivoPower International. In addition to that, TGI Solar is 1.07 times more volatile than VivoPower International PLC. It trades about -0.02 of its total potential returns per unit of risk. VivoPower International PLC is currently generating about 0.01 per unit of volatility. If you would invest  182.00  in VivoPower International PLC on September 3, 2024 and sell it today you would lose (64.00) from holding VivoPower International PLC or give up 35.16% of portfolio value over 90 days.

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

TGI Solar Power  vs.  VivoPower International PLC

TGI Solar Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TGI Solar Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with TGI Solar and VivoPower International

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

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.