Correlation Between Lilium NV and Microvast Holdings
Can any of the company-specific risk be diversified away by investing in both Lilium NV 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 Lilium NV and Microvast Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lilium NV and Microvast Holdings, you can compare the effects of market volatilities on Lilium NV 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 Lilium NV with a short position of Microvast Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lilium NV and Microvast Holdings.
Diversification Opportunities for Lilium NV and Microvast Holdings
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lilium and Microvast is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lilium NV and Microvast Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microvast Holdings and Lilium NV 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 Lilium NV 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 Lilium NV i.e., Lilium NV and Microvast Holdings go up and down completely randomly.
Pair Corralation between Lilium NV and Microvast Holdings
Given the investment horizon of 90 days Lilium NV is expected to under-perform the Microvast Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Lilium NV is 1.38 times less risky than Microvast Holdings. The stock trades about -0.06 of its potential returns per unit of risk. The Microvast Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2.48 in Microvast Holdings on August 30, 2024 and sell it today you would earn a total of 5.78 from holding Microvast Holdings or generate 233.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Lilium NV vs. Microvast Holdings
Performance |
| Timeline |
| Lilium NV |
| Microvast Holdings |
Lilium NV and Microvast Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lilium NV and Microvast Holdings
The main advantage of trading using opposite Lilium NV and Microvast Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lilium NV 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.| Lilium NV vs. Vertical Aerospace | Lilium NV vs. Ehang Holdings | Lilium NV vs. Rocket Lab USA | Lilium NV vs. Archer Aviation |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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