Correlation Between Momentus and Microvast Holdings
Can any of the company-specific risk be diversified away by investing in both Momentus 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 Momentus and Microvast Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Momentus and Microvast Holdings, you can compare the effects of market volatilities on Momentus 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 Momentus with a short position of Microvast Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Momentus and Microvast Holdings.
Diversification Opportunities for Momentus and Microvast Holdings
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Momentus and Microvast is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Momentus and Microvast Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microvast Holdings and Momentus 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 Momentus 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 Momentus i.e., Momentus and Microvast Holdings go up and down completely randomly.
Pair Corralation between Momentus and Microvast Holdings
Assuming the 90 days horizon Momentus is expected to generate 1.75 times more return on investment than Microvast Holdings. However, Momentus is 1.75 times more volatile than Microvast Holdings. It trades about 0.08 of its potential returns per unit of risk. Microvast Holdings is currently generating about 0.04 per unit of risk. If you would invest 7.69 in Momentus on August 31, 2024 and sell it today you would lose (6.26) from holding Momentus or give up 81.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.89% |
| Values | Daily Returns |
Momentus vs. Microvast Holdings
Performance |
| Timeline |
| Momentus |
| Microvast Holdings |
Momentus and Microvast Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Momentus and Microvast Holdings
The main advantage of trading using opposite Momentus and Microvast Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Momentus 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.| Momentus vs. Microvast Holdings | Momentus vs. Momentus | Momentus vs. Faraday Future Intelligent | Momentus vs. Xos Equity Warrants |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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