Correlation Between Microvast Holdings and Xos Equity

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

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

Diversification Opportunities for Microvast Holdings and Xos Equity

-0.48

Correlation Coefficient

Microvast Holdings  Xos Equity

Very good diversification

The 3 months correlation between Microvast and Xos is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Xos Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos Equity Warrants 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 Xos Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xos Equity Warrants has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Xos Equity go up and down completely randomly.

Pair Corralation between Microvast Holdings and Xos Equity

Assuming the 90 days horizon Microvast Holdings is expected to under-perform the Xos Equity. But the stock apears to be less risky and, when comparing its historical volatility, Microvast Holdings is 2.03 times less risky than Xos Equity. The stock trades about -0.09 of its potential returns per unit of risk. The Xos Equity Warrants is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.70  in Xos Equity Warrants on December 29, 2024 and sell it today you would earn a total of  0.26  from holding Xos Equity Warrants or generate 37.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Microvast Holdings  vs.  Xos Equity Warrants

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.

Xos Equity Warrants

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xos Equity Warrants are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Xos Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microvast Holdings and Xos Equity

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

The idea behind Microvast Holdings and Xos Equity Warrants 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.