Correlation Between Paysafe and Microvast Holdings

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

By analyzing existing cross correlation between Paysafe Ltd Wt and Microvast Holdings, you can compare the effects of market volatilities on Paysafe and Microvast 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 Paysafe with a short position of Microvast Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paysafe and Microvast Holdings.

Diversification Opportunities for Paysafe and Microvast Holdings

-0.27

Correlation Coefficient

Paysafe  Microvast Holdings

Very good diversification

The 3 months correlation between Paysafe and Microvast is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Paysafe Ltd Wt and Microvast Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microvast Holdings and Paysafe 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 Paysafe Ltd Wt are associated (or correlated) with Microvast Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microvast Holdings has no effect on the direction of Paysafe i.e., Paysafe and Microvast Holdings go up and down completely randomly.

Pair Corralation between Paysafe and Microvast Holdings

Assuming the 90 days trading horizon Paysafe Ltd Wt is expected to under-perform the Microvast Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Paysafe Ltd Wt is 1.75 times less risky than Microvast Holdings. The stock trades about 0.0 of its potential returns per unit of risk. The Microvast Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Microvast Holdings on November 30, 2024 and sell it today you would earn a total of  15.00  from holding Microvast Holdings or generate 150.0% return on investment over 90 days.

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

Paysafe Ltd Wt  vs.  Microvast Holdings

Paysafe Ltd Wt

Risk-Adjusted Performance

Very Weak

Over the last 90 days Paysafe Ltd Wt has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Paysafe is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Microvast Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 13 (%) 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.

Pair Trading with Paysafe and Microvast Holdings

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

The idea behind Paysafe Ltd Wt and Microvast Holdings 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 Anywhere module to track or share privately all of your investments from the convenience of any device.