Correlation Between Microvast Holdings and Enovix Corp

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

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

Diversification Opportunities for Microvast Holdings and Enovix Corp

0.7

Correlation Coefficient

Microvast Holdings  Enovix Corp

Poor diversification

The 3 months correlation between Microvast and Enovix is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Enovix Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enovix Corp 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 Enovix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enovix Corp has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Enovix Corp go up and down completely randomly.

Pair Corralation between Microvast Holdings and Enovix Corp

Given the investment horizon of 90 days Microvast Holdings is expected to under-perform the Enovix Corp. In addition to that, Microvast Holdings is 1.44 times more volatile than Enovix Corp. It trades about -0.14 of its total potential returns per unit of risk. Enovix Corp is currently generating about -0.09 per unit of volatility. If you would invest  1,100  in Enovix Corp on December 30, 2024 and sell it today you would lose (352.00) from holding Enovix Corp or give up 32.0% 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.  Enovix Corp

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.

Enovix Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enovix Corp 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 fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Microvast Holdings and Enovix Corp

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

The idea behind Microvast Holdings and Enovix Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.