Correlation Between Indie Semiconductor and Microvast Holdings

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

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

Diversification Opportunities for Indie Semiconductor and Microvast Holdings

-0.04

Correlation Coefficient

Indie Semiconductor  Microvast Holdings

Good diversification

The 3 months correlation between Indie and Microvast is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Indie Semiconductor Warrant and Microvast Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microvast Holdings and Indie Semiconductor 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 Indie Semiconductor Warrant 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 Indie Semiconductor i.e., Indie Semiconductor and Microvast Holdings go up and down completely randomly.

Pair Corralation between Indie Semiconductor and Microvast Holdings

If you would invest  2.40  in Microvast Holdings on September 1, 2024 and sell it today you would earn a total of  5.11  from holding Microvast Holdings or generate 212.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

Indie Semiconductor Warrant  vs.  Microvast Holdings

Indie Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indie Semiconductor Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Indie Semiconductor 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

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Microvast Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indie Semiconductor and Microvast Holdings

The main advantage of trading using opposite Indie Semiconductor and Microvast Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indie Semiconductor 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 Indie Semiconductor Warrant 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.