Correlation Between Generation Alpha and Microvast Holdings

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

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

Diversification Opportunities for Generation Alpha and Microvast Holdings

-0.27

Correlation Coefficient

Generation Alpha  Microvast Holdings

Very good diversification

The 3 months correlation between Generation and Microvast is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Generation Alpha and Microvast Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microvast Holdings and Generation Alpha 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 Generation Alpha 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 Generation Alpha i.e., Generation Alpha and Microvast Holdings go up and down completely randomly.

Pair Corralation between Generation Alpha and Microvast Holdings

Given the investment horizon of 90 days Generation Alpha is expected to generate 2.05 times less return on investment than Microvast Holdings. But when comparing it to its historical volatility, Generation Alpha is 1.48 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 0.13 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Microvast Holdings on September 16, 2024 and sell it today you would earn a total of  99.00  from holding Microvast Holdings or generate 353.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Generation Alpha  vs.  Microvast Holdings

Generation Alpha

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Alpha are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Generation Alpha disclosed solid returns over the last few months and may actually be approaching a breakup point.

Microvast Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 10 (%) 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 Generation Alpha and Microvast Holdings

The main advantage of trading using opposite Generation Alpha and Microvast Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generation Alpha 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 Generation Alpha 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.