Correlation Between Vishay Intertechnology and SCOTT TECHNOLOGY

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

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

Diversification Opportunities for Vishay Intertechnology and SCOTT TECHNOLOGY

0.36

Correlation Coefficient

Vishay Intertechnology  SCOTT TECHNOLOGY

Weak diversification

The 3 months correlation between Vishay and SCOTT is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY and Vishay Intertechnology 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 Vishay Intertechnology are associated (or correlated) with SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of Vishay Intertechnology i.e., Vishay Intertechnology and SCOTT TECHNOLOGY go up and down completely randomly.

Pair Corralation between Vishay Intertechnology and SCOTT TECHNOLOGY

Assuming the 90 days trading horizon Vishay Intertechnology is expected to generate 1.42 times more return on investment than SCOTT TECHNOLOGY. However, Vishay Intertechnology is 1.42 times more volatile than SCOTT TECHNOLOGY. It trades about 0.04 of its potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about -0.04 per unit of risk. If you would invest  1,612  in Vishay Intertechnology on September 27, 2024 and sell it today you would earn a total of  30.00  from holding Vishay Intertechnology or generate 1.86% return on investment over 90 days.

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

Vishay Intertechnology  vs.  SCOTT TECHNOLOGY

Vishay Intertechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vishay Intertechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vishay Intertechnology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SCOTT TECHNOLOGY

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SCOTT TECHNOLOGY are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, SCOTT TECHNOLOGY exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vishay Intertechnology and SCOTT TECHNOLOGY

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

The idea behind Vishay Intertechnology and SCOTT TECHNOLOGY 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.