Correlation Between Microvast Holdings and FREYR Battery
Can any of the company-specific risk be diversified away by investing in both Microvast Holdings and FREYR Battery 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 FREYR Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microvast Holdings and FREYR Battery SA, you can compare the effects of market volatilities on Microvast Holdings and FREYR Battery 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 FREYR Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microvast Holdings and FREYR Battery.
Diversification Opportunities for Microvast Holdings and FREYR Battery
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microvast and FREYR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and FREYR Battery SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FREYR Battery SA 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 FREYR Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FREYR Battery SA has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and FREYR Battery go up and down completely randomly.
Pair Corralation between Microvast Holdings and FREYR Battery
Given the investment horizon of 90 days Microvast Holdings is expected to generate 4.39 times more return on investment than FREYR Battery. However, Microvast Holdings is 4.39 times more volatile than FREYR Battery SA. It trades about 0.2 of its potential returns per unit of risk. FREYR Battery SA is currently generating about 0.3 per unit of risk. If you would invest 21.00 in Microvast Holdings on August 27, 2024 and sell it today you would earn a total of 46.00 from holding Microvast Holdings or generate 219.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microvast Holdings vs. FREYR Battery SA
Performance |
| Timeline |
| Microvast Holdings |
| FREYR Battery SA |
Microvast Holdings and FREYR Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microvast Holdings and FREYR Battery
The main advantage of trading using opposite Microvast Holdings and FREYR Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microvast Holdings position performs unexpectedly, FREYR Battery 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 FREYR Battery will offset losses from the drop in FREYR Battery's long position.| Microvast Holdings vs. FREYR Battery SA | Microvast Holdings vs. Bloom Energy Corp | Microvast Holdings vs. Enovix Corp | Microvast Holdings vs. Plug Power |
| FREYR Battery vs. Solid Power | FREYR Battery vs. Enovix Corp | FREYR Battery vs. Microvast Holdings | FREYR Battery vs. LiCycle Holdings Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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