Correlation Between Microvast Holdings and Origin Materials

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

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

Diversification Opportunities for Microvast Holdings and Origin Materials

-0.01

Correlation Coefficient

Microvast Holdings  Origin Materials

Good diversification

The 3 months correlation between Microvast and Origin is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Origin Materials Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials Warrant 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 Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials Warrant has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Origin Materials go up and down completely randomly.

Pair Corralation between Microvast Holdings and Origin Materials

Assuming the 90 days horizon Microvast Holdings is expected to generate 0.92 times more return on investment than Origin Materials. However, Microvast Holdings is 1.09 times less risky than Origin Materials. It trades about 0.22 of its potential returns per unit of risk. Origin Materials Warrant is currently generating about 0.04 per unit of risk. If you would invest  7.51  in Microvast Holdings on November 29, 2024 and sell it today you would earn a total of  20.49  from holding Microvast Holdings or generate 272.84% 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.  Origin Materials Warrant

Microvast Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 17 (%) 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.

Origin Materials Warrant

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Materials Warrant are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Origin Materials showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microvast Holdings and Origin Materials

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

The idea behind Microvast Holdings and Origin Materials Warrant 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.