Correlation Between Microvast Holdings and Kandi Technologies

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

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

Diversification Opportunities for Microvast Holdings and Kandi Technologies

-0.62

Correlation Coefficient

Microvast Holdings  Kandi Technologies

Excellent diversification

The 3 months correlation between Microvast and Kandi is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Kandi Technologies Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kandi Technologies 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 Kandi Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kandi Technologies has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Kandi Technologies go up and down completely randomly.

Pair Corralation between Microvast Holdings and Kandi Technologies

Assuming the 90 days horizon Microvast Holdings is expected to generate 4.44 times more return on investment than Kandi Technologies. However, Microvast Holdings is 4.44 times more volatile than Kandi Technologies Group. It trades about 0.07 of its potential returns per unit of risk. Kandi Technologies Group is currently generating about -0.04 per unit of risk. If you would invest  20.00  in Microvast Holdings on October 5, 2024 and sell it today you would earn a total of  25.00  from holding Microvast Holdings or generate 125.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.12%
Values	Daily Returns

Microvast Holdings  vs.  Kandi Technologies Group

Microvast Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Microvast Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Kandi Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kandi Technologies Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Microvast Holdings and Kandi Technologies

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

The idea behind Microvast Holdings and Kandi Technologies Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.