Correlation Between Microvast Holdings and Erayak Power
Can any of the company-specific risk be diversified away by investing in both Microvast Holdings and Erayak Power 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 Erayak Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microvast Holdings and Erayak Power Solution, you can compare the effects of market volatilities on Microvast Holdings and Erayak Power 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 Erayak Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microvast Holdings and Erayak Power.
Diversification Opportunities for Microvast Holdings and Erayak Power
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microvast and Erayak is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Erayak Power Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erayak Power Solution 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 Erayak Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erayak Power Solution has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Erayak Power go up and down completely randomly.
Pair Corralation between Microvast Holdings and Erayak Power
Given the investment horizon of 90 days Microvast Holdings is expected to generate 4.53 times more return on investment than Erayak Power. However, Microvast Holdings is 4.53 times more volatile than Erayak Power Solution. It trades about 0.11 of its potential returns per unit of risk. Erayak Power Solution is currently generating about 0.07 per unit of risk. If you would invest 29.00 in Microvast Holdings on November 28, 2024 and sell it today you would earn a total of 146.00 from holding Microvast Holdings or generate 503.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microvast Holdings vs. Erayak Power Solution
Performance |
| Timeline |
| Microvast Holdings |
| Erayak Power Solution |
Microvast Holdings and Erayak Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microvast Holdings and Erayak Power
The main advantage of trading using opposite Microvast Holdings and Erayak Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microvast Holdings position performs unexpectedly, Erayak Power 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 Erayak Power will offset losses from the drop in Erayak Power'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 |
| Erayak Power vs. NeoVolta Common Stock | Erayak Power vs. Hayward Holdings | Erayak Power vs. Advanced Energy Industries | Erayak Power vs. Espey Mfg Electronics |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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