Correlation Between Vishay Intertechnology and Guangdong Investment

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

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

Diversification Opportunities for Vishay Intertechnology and Guangdong Investment

0.26

Correlation Coefficient

Vishay Intertechnology  Guangdong Investment

Modest diversification

The 3 months correlation between Vishay and Guangdong is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment 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 Guangdong Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Investment has no effect on the direction of Vishay Intertechnology i.e., Vishay Intertechnology and Guangdong Investment go up and down completely randomly.

Pair Corralation between Vishay Intertechnology and Guangdong Investment

Considering the 90-day investment horizon Vishay Intertechnology is expected to generate 0.37 times more return on investment than Guangdong Investment. However, Vishay Intertechnology is 2.73 times less risky than Guangdong Investment. It trades about -0.09 of its potential returns per unit of risk. Guangdong Investment Limited is currently generating about -0.22 per unit of risk. If you would invest  2,167  in Vishay Intertechnology on January 20, 2024 and sell it today you would lose (77.00) from holding Vishay Intertechnology or give up 3.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Vishay Intertechnology  vs.  Guangdong Investment Limited

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 uncertain 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.

Guangdong Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangdong Investment Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Vishay Intertechnology and Guangdong Investment

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

The idea behind Vishay Intertechnology and Guangdong Investment Limited 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.