Correlation Between Capstone Companies and Microvast Holdings

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

By analyzing existing cross correlation between Capstone Companies and Microvast Holdings, you can compare the effects of market volatilities on Capstone Companies 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 Capstone Companies with a short position of Microvast Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstone Companies and Microvast Holdings.

Diversification Opportunities for Capstone Companies and Microvast Holdings

0.42

Correlation Coefficient

Capstone Companies  Microvast Holdings

Very weak diversification

The 3 months correlation between Capstone and Microvast is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Companies and Microvast Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microvast Holdings and Capstone Companies 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 Capstone Companies 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 Capstone Companies i.e., Capstone Companies and Microvast Holdings go up and down completely randomly.

Pair Corralation between Capstone Companies and Microvast Holdings

Given the investment horizon of 90 days Capstone Companies is expected to generate 6.97 times more return on investment than Microvast Holdings. However, Capstone Companies is 6.97 times more volatile than Microvast Holdings. It trades about 0.16 of its potential returns per unit of risk. Microvast Holdings is currently generating about -0.08 per unit of risk. If you would invest  3.30  in Capstone Companies on April 25, 2025 and sell it today you would earn a total of  0.42  from holding Capstone Companies or generate 12.73% return on investment over 90 days.

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

Capstone Companies  vs.  Microvast Holdings

Capstone Companies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Companies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Capstone Companies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Microvast Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Microvast Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capstone Companies and Microvast Holdings

The main advantage of trading using opposite Capstone Companies and Microvast Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capstone Companies 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.

The idea behind Capstone Companies and Microvast Holdings 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.