Correlation Between Microvast Holdings and Hyliion Holdings

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

Diversification Opportunities for Microvast Holdings and Hyliion Holdings

0.55

Correlation Coefficient

Microvast Holdings  Hyliion Holdings

Very weak diversification

The 3 months correlation between Microvast and Hyliion is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Hyliion Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyliion 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 Hyliion Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyliion Holdings Corp has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Hyliion Holdings go up and down completely randomly.

Pair Corralation between Microvast Holdings and Hyliion Holdings

Assuming the 90 days horizon Microvast Holdings is expected to generate 1.7 times more return on investment than Hyliion Holdings. However, Microvast Holdings is 1.7 times more volatile than Hyliion Holdings Corp. It trades about 0.55 of its potential returns per unit of risk. Hyliion Holdings Corp is currently generating about -0.02 per unit of risk. If you would invest  6.10  in Microvast Holdings on September 21, 2024 and sell it today you would earn a total of  15.80  from holding Microvast Holdings or generate 259.02% return on investment over 90 days.

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

Microvast Holdings  vs.  Hyliion Holdings Corp

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.

Hyliion Holdings Corp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hyliion Holdings Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal essential indicators, Hyliion Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microvast Holdings and Hyliion Holdings

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

The idea behind Microvast Holdings and Hyliion 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.