Correlation Between Microvast Holdings and Rollins

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

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

Diversification Opportunities for Microvast Holdings and Rollins

-0.09

Correlation Coefficient

Microvast Holdings  Rollins

Good diversification

The 3 months correlation between Microvast and Rollins is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Rollins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rollins 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 Rollins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rollins has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Rollins go up and down completely randomly.

Pair Corralation between Microvast Holdings and Rollins

Assuming the 90 days horizon Microvast Holdings is expected to generate 11.64 times more return on investment than Rollins. However, Microvast Holdings is 11.64 times more volatile than Rollins. It trades about 0.55 of its potential returns per unit of risk. Rollins is currently generating about -0.22 per unit of risk. If you would invest  6.10  in Microvast Holdings on September 21, 2024 and sell it today you would earn a total of  15.90  from holding Microvast Holdings or generate 260.66% return on investment over 90 days.

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

Microvast Holdings  vs.  Rollins

Microvast Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 15 (%) 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.

Rollins

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rollins has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Microvast Holdings and Rollins

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

The idea behind Microvast Holdings and Rollins 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.