Correlation Between Microvast Holdings and Bakkt Holdings

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

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

Diversification Opportunities for Microvast Holdings and Bakkt Holdings

0.85

Correlation Coefficient

Microvast Holdings  Bakkt Holdings

Very poor diversification

The 3 months correlation between Microvast and Bakkt is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Bakkt Holdings Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakkt Holdings 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 Bakkt Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakkt Holdings Warrant has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Bakkt Holdings go up and down completely randomly.

Pair Corralation between Microvast Holdings and Bakkt Holdings

Assuming the 90 days horizon Microvast Holdings is expected to generate 1.15 times less return on investment than Bakkt Holdings. But when comparing it to its historical volatility, Microvast Holdings is 1.43 times less risky than Bakkt Holdings. It trades about 0.18 of its potential returns per unit of risk. Bakkt Holdings Warrant is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  8.98  in Bakkt Holdings Warrant on September 21, 2024 and sell it today you would earn a total of  41.02  from holding Bakkt Holdings Warrant or generate 456.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Microvast Holdings  vs.  Bakkt Holdings Warrant

Microvast Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Microvast Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Bakkt Holdings Warrant

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bakkt Holdings Warrant are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bakkt Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microvast Holdings and Bakkt Holdings

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

The idea behind Microvast Holdings and Bakkt Holdings 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.