Correlation Between Vishay Intertechnology and NetEase

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

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

Diversification Opportunities for Vishay Intertechnology and NetEase

0.14

Correlation Coefficient

Vishay Intertechnology  NetEase

Average diversification

The 3 months correlation between Vishay and NetEase is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase 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 NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of Vishay Intertechnology i.e., Vishay Intertechnology and NetEase go up and down completely randomly.

Pair Corralation between Vishay Intertechnology and NetEase

Considering the 90-day investment horizon Vishay Intertechnology is expected to under-perform the NetEase. In addition to that, Vishay Intertechnology is 1.3 times more volatile than NetEase. It trades about -0.23 of its total potential returns per unit of risk. NetEase is currently generating about -0.18 per unit of volatility. If you would invest  9,690  in NetEase on October 12, 2024 and sell it today you would lose (462.00) from holding NetEase or give up 4.77% of portfolio value over 90 days.

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

Vishay Intertechnology  vs.  NetEase

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. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

NetEase

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NetEase are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, NetEase may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vishay Intertechnology and NetEase

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

The idea behind Vishay Intertechnology and NetEase 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.