Correlation Between Microvast Holdings and LiCycle Holdings

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

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

Diversification Opportunities for Microvast Holdings and LiCycle Holdings

-0.38

Correlation Coefficient

Microvast Holdings  LiCycle Holdings

Very good diversification

The 3 months correlation between Microvast and LiCycle is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and LiCycle Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiCycle Holdings 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 LiCycle Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiCycle Holdings Corp has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and LiCycle Holdings go up and down completely randomly.

Pair Corralation between Microvast Holdings and LiCycle Holdings

Given the investment horizon of 90 days Microvast Holdings is expected to generate 1.6 times more return on investment than LiCycle Holdings. However, Microvast Holdings is 1.6 times more volatile than LiCycle Holdings Corp. It trades about 0.17 of its potential returns per unit of risk. LiCycle Holdings Corp is currently generating about -0.14 per unit of risk. If you would invest  76.00  in Microvast Holdings on November 28, 2024 and sell it today you would earn a total of  99.00  from holding Microvast Holdings or generate 130.26% return on investment over 90 days.

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

Microvast Holdings  vs.  LiCycle Holdings Corp

Microvast Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 13 (%) 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.

LiCycle Holdings Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days LiCycle Holdings 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 fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Microvast Holdings and LiCycle Holdings

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

The idea behind Microvast Holdings and LiCycle Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .