Correlation Between Microvast Holdings and Endeavour Mining

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

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

Diversification Opportunities for Microvast Holdings and Endeavour Mining

-0.77

Correlation Coefficient

Microvast Holdings  Endeavour Mining

Pay attention - limited upside

The 3 months correlation between Microvast and Endeavour is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Endeavour Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining Corp 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 Endeavour Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Mining Corp has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Endeavour Mining go up and down completely randomly.

Pair Corralation between Microvast Holdings and Endeavour Mining

Given the investment horizon of 90 days Microvast Holdings is expected to under-perform the Endeavour Mining. In addition to that, Microvast Holdings is 2.06 times more volatile than Endeavour Mining Corp. It trades about -0.12 of its total potential returns per unit of risk. Endeavour Mining Corp is currently generating about 0.04 per unit of volatility. If you would invest  2,144  in Endeavour Mining Corp on March 5, 2024 and sell it today you would earn a total of  34.00  from holding Endeavour Mining Corp or generate 1.59% return on investment over 90 days.

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

Microvast Holdings  vs.  Endeavour Mining Corp

Microvast Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Microvast Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Endeavour Mining Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Mining Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Endeavour Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microvast Holdings and Endeavour Mining

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

The idea behind Microvast Holdings and Endeavour Mining Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.