Correlation Between Microvast Holdings and Asia Pacific

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

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

Diversification Opportunities for Microvast Holdings and Asia Pacific

-0.75

Correlation Coefficient

Microvast Holdings  Asia Pacific

Pay attention - limited upside

The 3 months correlation between Microvast and Asia is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Asia Pacific Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pacific Wire and Microvast Holdings 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 Microvast Holdings are associated (or correlated) with Asia Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pacific Wire has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Asia Pacific go up and down completely randomly.

Pair Corralation between Microvast Holdings and Asia Pacific

Given the investment horizon of 90 days Microvast Holdings is expected to generate 3.38 times more return on investment than Asia Pacific. However, Microvast Holdings is 3.38 times more volatile than Asia Pacific Wire. It trades about 0.17 of its potential returns per unit of risk. Asia Pacific Wire is currently generating about -0.09 per unit of risk. If you would invest  76.00  in Microvast Holdings on November 29, 2024 and sell it today you would earn a total of  96.00  from holding Microvast Holdings or generate 126.32% return on investment over 90 days.

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

Microvast Holdings  vs.  Asia Pacific Wire

Microvast Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 13 (%) 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.

Asia Pacific Wire

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asia Pacific Wire has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Microvast Holdings and Asia Pacific

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

The idea behind Microvast Holdings and Asia Pacific Wire 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.