Correlation Between Microvast Holdings and Avepoint

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

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

Diversification Opportunities for Microvast Holdings and Avepoint

0.84

Correlation Coefficient

Microvast Holdings  Avepoint

Very poor diversification

The 3 months correlation between Microvast and Avepoint is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Avepoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avepoint 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 Avepoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avepoint has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Avepoint go up and down completely randomly.

Pair Corralation between Microvast Holdings and Avepoint

Assuming the 90 days horizon Microvast Holdings is expected to generate 7.76 times more return on investment than Avepoint. However, Microvast Holdings is 7.76 times more volatile than Avepoint. It trades about 0.56 of its potential returns per unit of risk. Avepoint is currently generating about -0.06 per unit of risk. If you would invest  6.26  in Microvast Holdings on September 22, 2024 and sell it today you would earn a total of  15.74  from holding Microvast Holdings or generate 251.44% return on investment over 90 days.

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

Microvast Holdings  vs.  Avepoint

Microvast Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Microvast Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Avepoint

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Avepoint are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Avepoint unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microvast Holdings and Avepoint

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

The idea behind Microvast Holdings and Avepoint 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.