Correlation Between Vishay Intertechnology and KLA Tencor

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

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

Diversification Opportunities for Vishay Intertechnology and KLA Tencor

0.51

Correlation Coefficient

Vishay Intertechnology  KLA Tencor

Very weak diversification

The 3 months correlation between Vishay and KLA is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and KLA Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Tencor 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 KLA Tencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Tencor has no effect on the direction of Vishay Intertechnology i.e., Vishay Intertechnology and KLA Tencor go up and down completely randomly.

Pair Corralation between Vishay Intertechnology and KLA Tencor

Considering the 90-day investment horizon Vishay Intertechnology is expected to generate 3.96 times less return on investment than KLA Tencor. But when comparing it to its historical volatility, Vishay Intertechnology is 1.14 times less risky than KLA Tencor. It trades about 0.02 of its potential returns per unit of risk. KLA Tencor is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  60,298  in KLA Tencor on February 2, 2024 and sell it today you would earn a total of  6,618  from holding KLA Tencor or generate 10.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Vishay Intertechnology  vs.  KLA Tencor

Vishay Intertechnology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vishay Intertechnology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Vishay Intertechnology is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

KLA Tencor

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KLA Tencor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, KLA Tencor may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Vishay Intertechnology and KLA Tencor

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

The idea behind Vishay Intertechnology and KLA Tencor 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 Commodity Directory module to find actively traded commodities issued by global exchanges.