Correlation Between Microvast Holdings and Tritium Dcfc

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

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

Diversification Opportunities for Microvast Holdings and Tritium Dcfc

-0.82

Correlation Coefficient

Microvast Holdings  Tritium Dcfc

Pay attention - limited upside

The 3 months correlation between Microvast and Tritium is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Tritium Dcfc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tritium Dcfc 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 Tritium Dcfc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tritium Dcfc has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Tritium Dcfc go up and down completely randomly.

Pair Corralation between Microvast Holdings and Tritium Dcfc

Given the investment horizon of 90 days Microvast Holdings is expected to generate 8.6 times less return on investment than Tritium Dcfc. But when comparing it to its historical volatility, Microvast Holdings is 8.94 times less risky than Tritium Dcfc. It trades about 0.17 of its potential returns per unit of risk. Tritium Dcfc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Tritium Dcfc on November 28, 2024 and sell it today you would lose (5.00) from holding Tritium Dcfc or give up 62.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	93.1%
Values	Daily Returns

Microvast Holdings  vs.  Tritium Dcfc

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.

Tritium Dcfc

Risk-Adjusted Performance

Good

Over the last 90 days Tritium Dcfc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak technical and fundamental indicators, Tritium Dcfc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microvast Holdings and Tritium Dcfc

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

The idea behind Microvast Holdings and Tritium Dcfc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..