Correlation Between Microvast Holdings and Fluence Energy

Can any of the company-specific risk be diversified away by investing in both Microvast Holdings and Fluence 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 Fluence 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 Fluence Energy, you can compare the effects of market volatilities on Microvast Holdings and Fluence 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 Fluence Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microvast Holdings and Fluence Energy.

Diversification Opportunities for Microvast Holdings and Fluence Energy

0.66

Correlation Coefficient

Microvast Holdings  Fluence Energy

Poor diversification

The 3 months correlation between Microvast and Fluence is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Fluence Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluence Energy 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 Fluence Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluence Energy has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Fluence Energy go up and down completely randomly.

Pair Corralation between Microvast Holdings and Fluence Energy

Given the investment horizon of 90 days Microvast Holdings is expected to generate 1.07 times more return on investment than Fluence Energy. However, Microvast Holdings is 1.07 times more volatile than Fluence Energy. It trades about -0.14 of its potential returns per unit of risk. Fluence Energy is currently generating about -0.22 per unit of risk. If you would invest  275.00  in Microvast Holdings on December 30, 2024 and sell it today you would lose (160.00) from holding Microvast Holdings or give up 58.18% 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.  Fluence Energy

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.

Fluence Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fluence Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Microvast Holdings and Fluence Energy

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

The idea behind Microvast Holdings and Fluence Energy 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.