Correlation Between VivoPower International and Clear Blue

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

Diversification Opportunities for VivoPower International and Clear Blue

0.67

Correlation Coefficient

VivoPower International  Clear Blue

Poor diversification

The 3 months correlation between VivoPower and Clear is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding VivoPower International PLC and Clear Blue Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clear Blue Technologies 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 Clear Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clear Blue Technologies has no effect on the direction of VivoPower International i.e., VivoPower International and Clear Blue go up and down completely randomly.

Pair Corralation between VivoPower International and Clear Blue

Given the investment horizon of 90 days VivoPower International PLC is expected to generate 0.77 times more return on investment than Clear Blue. However, VivoPower International PLC is 1.3 times less risky than Clear Blue. It trades about 0.01 of its potential returns per unit of risk. Clear Blue Technologies is currently generating about -0.03 per unit of risk. 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	98.46%
Values	Daily Returns

VivoPower International PLC  vs.  Clear Blue Technologies

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.

Clear Blue Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clear Blue Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent 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.

Pair Trading with VivoPower International and Clear Blue

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

The idea behind VivoPower International PLC and Clear Blue Technologies 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.