Correlation Between Microvast Holdings and Array Technologies

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

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

Diversification Opportunities for Microvast Holdings and Array Technologies

0.81

Correlation Coefficient

Microvast Holdings  Array Technologies

Very poor diversification

The 3 months correlation between Microvast and Array is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Microvast Holdings and Array Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Array Technologies 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 Array Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Array Technologies has no effect on the direction of Microvast Holdings i.e., Microvast Holdings and Array Technologies go up and down completely randomly.

Pair Corralation between Microvast Holdings and Array Technologies

Given the investment horizon of 90 days Microvast Holdings is expected to generate 1.06 times less return on investment than Array Technologies. In addition to that, Microvast Holdings is 1.09 times more volatile than Array Technologies. It trades about 0.15 of its total potential returns per unit of risk. Array Technologies is currently generating about 0.17 per unit of volatility. If you would invest  418.00  in Array Technologies on April 21, 2025 and sell it today you would earn a total of  292.00  from holding Array Technologies or generate 69.86% return on investment over 90 days.

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

Microvast Holdings  vs.  Array Technologies

Microvast Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microvast Holdings are ranked lower than 11 (%) 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.

Array Technologies

Risk-Adjusted Performance

Good

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

Pair Trading with Microvast Holdings and Array Technologies

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

The idea behind Microvast Holdings and Array Technologies 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.