Correlation Between Enovix Corp and Microvast Holdings

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

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

Diversification Opportunities for Enovix Corp and Microvast Holdings

0.76

Correlation Coefficient

Enovix Corp  Microvast Holdings

Poor diversification

The 3 months correlation between Enovix and Microvast is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Enovix Corp and Microvast Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microvast Holdings and Enovix Corp 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 Enovix Corp 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 Enovix Corp i.e., Enovix Corp and Microvast Holdings go up and down completely randomly.

Pair Corralation between Enovix Corp and Microvast Holdings

Given the investment horizon of 90 days Enovix Corp is expected to generate 0.44 times more return on investment than Microvast Holdings. However, Enovix Corp is 2.26 times less risky than Microvast Holdings. It trades about -0.09 of its potential returns per unit of risk. Microvast Holdings is currently generating about -0.09 per unit of risk. If you would invest  1,100  in Enovix Corp on December 30, 2024 and sell it today you would lose (352.00) from holding Enovix Corp or give up 32.0% of portfolio value over 90 days.

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

Enovix Corp  vs.  Microvast Holdings

Enovix Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enovix Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company 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 uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Enovix Corp and Microvast Holdings

The main advantage of trading using opposite Enovix Corp and Microvast Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enovix Corp 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 Enovix Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.