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

0.72

Correlation Coefficient

Microvast Holdings  Origin Materials

Poor diversification

The 3 months correlation between Microvast and Origin is 0.72. 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 under-perform the Origin Materials. But the stock apears to be less risky and, when comparing its historical volatility, Microvast Holdings is 1.09 times less risky than Origin Materials. The stock trades about -0.09 of its potential returns per unit of risk. The Origin Materials Warrant is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Origin Materials Warrant on December 30, 2024 and sell it today you would lose (6.97) from holding Origin Materials Warrant or give up 58.08% of portfolio value over 90 days.

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

Microvast Holdings  vs.  Origin Materials Warrant

Microvast Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microvast Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Origin Materials Warrant

Risk-Adjusted Performance

Very Weak

Over the last 90 days Origin Materials Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.