Correlation Between Cognex and Vishay Precision

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

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

Diversification Opportunities for Cognex and Vishay Precision

-0.25

Correlation Coefficient

Cognex  Vishay Precision

Very good diversification

The 3 months correlation between Cognex and Vishay is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cognex and Vishay Precision Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Precision and Cognex 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 Cognex are associated (or correlated) with Vishay Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Precision has no effect on the direction of Cognex i.e., Cognex and Vishay Precision go up and down completely randomly.

Pair Corralation between Cognex and Vishay Precision

Given the investment horizon of 90 days Cognex is expected to generate 1.06 times more return on investment than Vishay Precision. However, Cognex is 1.06 times more volatile than Vishay Precision Group. It trades about -0.01 of its potential returns per unit of risk. Vishay Precision Group is currently generating about -0.05 per unit of risk. If you would invest  4,192  in Cognex on September 17, 2024 and sell it today you would lose (484.00) from holding Cognex or give up 11.55% of portfolio value over 90 days.

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

Cognex  vs.  Vishay Precision Group

Cognex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cognex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Cognex is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Vishay Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vishay Precision Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vishay Precision is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cognex and Vishay Precision

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

The idea behind Cognex and Vishay Precision Group 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.