Correlation Between ADS TEC and Microvast Holdings

Can any of the company-specific risk be diversified away by investing in both ADS TEC and Microvast Holdings 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 ADS TEC and Microvast Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ADS TEC ENERGY PLC and Microvast Holdings, you can compare the effects of market volatilities on ADS TEC and Microvast Holdings 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 ADS TEC with a short position of Microvast Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADS TEC and Microvast Holdings.

Diversification Opportunities for ADS TEC and Microvast Holdings

0.46

Correlation Coefficient

ADS TEC  Microvast Holdings

Very weak diversification

The 3 months correlation between ADS and Microvast is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ADS TEC ENERGY PLC and Microvast Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microvast Holdings and ADS TEC 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 ADS TEC ENERGY PLC are associated (or correlated) with Microvast Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microvast Holdings has no effect on the direction of ADS TEC i.e., ADS TEC and Microvast Holdings go up and down completely randomly.

Pair Corralation between ADS TEC and Microvast Holdings

Assuming the 90 days horizon ADS TEC ENERGY PLC is expected to generate 0.75 times more return on investment than Microvast Holdings. However, ADS TEC ENERGY PLC is 1.33 times less risky than Microvast Holdings. It trades about 0.0 of its potential returns per unit of risk. Microvast Holdings is currently generating about -0.14 per unit of risk. If you would invest  365.00  in ADS TEC ENERGY PLC on December 29, 2024 and sell it today you would lose (35.00) from holding ADS TEC ENERGY PLC or give up 9.59% of portfolio value over 90 days.

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

ADS TEC ENERGY PLC  vs.  Microvast Holdings

ADS TEC ENERGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days ADS TEC ENERGY PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, ADS TEC is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Microvast Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microvast Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ADS TEC and Microvast Holdings

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

The idea behind ADS TEC ENERGY PLC and Microvast Holdings 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..