Correlation Between Microvast Holdings and Espey Mfg

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

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

Diversification Opportunities for Microvast Holdings and Espey Mfg

-0.07

Correlation Coefficient

Microvast Holdings  Espey Mfg

Good diversification

The 3 months correlation between Microvast and Espey is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Espey Mfg Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Espey Mfg Electronics 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 Espey Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Espey Mfg Electronics has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Espey Mfg go up and down completely randomly.

Pair Corralation between Microvast Holdings and Espey Mfg

Given the investment horizon of 90 days Microvast Holdings is expected to under-perform the Espey Mfg. In addition to that, Microvast Holdings is 2.91 times more volatile than Espey Mfg Electronics. It trades about -0.09 of its total potential returns per unit of risk. Espey Mfg Electronics is currently generating about -0.07 per unit of volatility. If you would invest  2,937  in Espey Mfg Electronics on December 2, 2024 and sell it today you would lose (255.00) from holding Espey Mfg Electronics or give up 8.68% of portfolio value over 90 days.

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

Microvast Holdings  vs.  Espey Mfg Electronics

Microvast Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 8 (%) 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.

Espey Mfg Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Espey Mfg Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Espey Mfg is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Microvast Holdings and Espey Mfg

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

The idea behind Microvast Holdings and Espey Mfg Electronics 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.