Correlation Between Microvast Holdings and Energizer Holdings

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

Diversification Opportunities for Microvast Holdings and Energizer Holdings

0.72

Correlation Coefficient

Microvast Holdings  Energizer Holdings

Poor diversification

The 3 months correlation between Microvast and Energizer is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Energizer Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energizer Holdings 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 Energizer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energizer Holdings has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Energizer Holdings go up and down completely randomly.

Pair Corralation between Microvast Holdings and Energizer Holdings

Assuming the 90 days horizon Microvast Holdings is expected to generate 8.62 times more return on investment than Energizer Holdings. However, Microvast Holdings is 8.62 times more volatile than Energizer Holdings. It trades about 0.56 of its potential returns per unit of risk. Energizer Holdings is currently generating about -0.22 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	Significant
Accuracy	100.0%
Values	Daily Returns

Microvast Holdings  vs.  Energizer Holdings

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.

Energizer Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Energizer Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Energizer Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microvast Holdings and Energizer Holdings

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

The idea behind Microvast Holdings and Energizer Holdings 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.