Correlation Between Microvast Holdings and GrafTech International

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

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

Diversification Opportunities for Microvast Holdings and GrafTech International

0.46

Correlation Coefficient

Microvast Holdings  GrafTech International

Very weak diversification

The 3 months correlation between Microvast and GrafTech is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and GrafTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrafTech International 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 GrafTech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrafTech International has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and GrafTech International go up and down completely randomly.

Pair Corralation between Microvast Holdings and GrafTech International

Given the investment horizon of 90 days Microvast Holdings is expected to generate 6.91 times more return on investment than GrafTech International. However, Microvast Holdings is 6.91 times more volatile than GrafTech International. It trades about 0.15 of its potential returns per unit of risk. GrafTech International is currently generating about 0.27 per unit of risk. If you would invest  19.00  in Microvast Holdings on September 12, 2024 and sell it today you would earn a total of  106.00  from holding Microvast Holdings or generate 557.89% return on investment over 90 days.

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

Microvast Holdings  vs.  GrafTech International

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 comparatively weak basic indicators, Microvast Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

GrafTech International

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GrafTech International are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, GrafTech International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microvast Holdings and GrafTech International

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

The idea behind Microvast Holdings and GrafTech International 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 Commodity Directory module to find actively traded commodities issued by global exchanges.