Correlation Between Microvast Holdings and Katapult Holdings

Can any of the company-specific risk be diversified away by investing in both Microvast Holdings and Katapult 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 Katapult 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 Katapult Holdings Equity, you can compare the effects of market volatilities on Microvast Holdings and Katapult 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 Katapult Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microvast Holdings and Katapult Holdings.

Diversification Opportunities for Microvast Holdings and Katapult Holdings

-0.24

Correlation Coefficient

Microvast Holdings  Katapult Holdings

Very good diversification

The 3 months correlation between Microvast and Katapult is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Katapult Holdings Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katapult Holdings Equity 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 Katapult Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katapult Holdings Equity has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Katapult Holdings go up and down completely randomly.

Pair Corralation between Microvast Holdings and Katapult Holdings

Assuming the 90 days horizon Microvast Holdings is expected to generate 2.1 times more return on investment than Katapult Holdings. However, Microvast Holdings is 2.1 times more volatile than Katapult Holdings Equity. It trades about 0.15 of its potential returns per unit of risk. Katapult Holdings Equity is currently generating about 0.03 per unit of risk. If you would invest  2.40  in Microvast Holdings on September 2, 2024 and sell it today you would earn a total of  5.11  from holding Microvast Holdings or generate 212.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Microvast Holdings  vs.  Katapult Holdings Equity

Microvast Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 11 (%) 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.

Katapult Holdings Equity

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Katapult Holdings Equity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Katapult Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microvast Holdings and Katapult Holdings

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

The idea behind Microvast Holdings and Katapult Holdings Equity 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.