Correlation Between Fluence Energy and Microvast Holdings

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

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

Diversification Opportunities for Fluence Energy and Microvast Holdings

0.02

Correlation Coefficient

Fluence Energy  Microvast Holdings

Significant diversification

The 3 months correlation between Fluence and Microvast is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Fluence Energy and Microvast Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microvast Holdings and Fluence Energy 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 Fluence Energy 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 Fluence Energy i.e., Fluence Energy and Microvast Holdings go up and down completely randomly.

Pair Corralation between Fluence Energy and Microvast Holdings

Given the investment horizon of 90 days Fluence Energy is expected to generate 29.15 times less return on investment than Microvast Holdings. But when comparing it to its historical volatility, Fluence Energy is 9.14 times less risky than Microvast Holdings. It trades about 0.04 of its potential returns per unit of risk. Microvast Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Microvast Holdings on August 30, 2024 and sell it today you would earn a total of  55.00  from holding Microvast Holdings or generate 189.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Fluence Energy  vs.  Microvast Holdings

Fluence Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fluence Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Fluence Energy may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Microvast Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Microvast Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fluence Energy and Microvast Holdings

The main advantage of trading using opposite Fluence Energy and Microvast Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fluence Energy 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 Fluence Energy 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.