Correlation Between Microvast Holdings and CBAK Energy

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

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

Diversification Opportunities for Microvast Holdings and CBAK Energy

0.68

Correlation Coefficient

Microvast Holdings  CBAK Energy

Poor diversification

The 3 months correlation between Microvast and CBAK is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and CBAK Energy Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBAK Energy Technology 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 CBAK Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBAK Energy Technology has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and CBAK Energy go up and down completely randomly.

Pair Corralation between Microvast Holdings and CBAK Energy

Given the investment horizon of 90 days Microvast Holdings is expected to under-perform the CBAK Energy. In addition to that, Microvast Holdings is 2.53 times more volatile than CBAK Energy Technology. It trades about -0.14 of its total potential returns per unit of risk. CBAK Energy Technology is currently generating about -0.15 per unit of volatility. If you would invest  108.00  in CBAK Energy Technology on December 29, 2024 and sell it today you would lose (29.00) from holding CBAK Energy Technology or give up 26.85% of portfolio value over 90 days.

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

Microvast Holdings  vs.  CBAK Energy Technology

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CBAK Energy Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days CBAK Energy Technology 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Microvast Holdings and CBAK Energy

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

The idea behind Microvast Holdings and CBAK Energy Technology 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.