Correlation Between Microvast Holdings and Global Pole

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

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

Diversification Opportunities for Microvast Holdings and Global Pole

0.65

Correlation Coefficient

Microvast Holdings  Global Pole

Poor diversification

The 3 months correlation between Microvast and Global is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Global Pole Trusion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Pole Trusion 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 Global Pole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Pole Trusion has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Global Pole go up and down completely randomly.

Pair Corralation between Microvast Holdings and Global Pole

Given the investment horizon of 90 days Microvast Holdings is expected to generate 2.88 times less return on investment than Global Pole. But when comparing it to its historical volatility, Microvast Holdings is 2.83 times less risky than Global Pole. It trades about 0.13 of its potential returns per unit of risk. Global Pole Trusion is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.63  in Global Pole Trusion on September 15, 2024 and sell it today you would earn a total of  39.37  from holding Global Pole Trusion or generate 6249.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Microvast Holdings  vs.  Global Pole Trusion

Microvast Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 10 (%) 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.

Global Pole Trusion

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Pole Trusion are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Global Pole exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microvast Holdings and Global Pole

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

The idea behind Microvast Holdings and Global Pole Trusion 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.