Correlation Between Fastighets and Vishay Intertechnology

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

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

Diversification Opportunities for Fastighets and Vishay Intertechnology

0.12

Correlation Coefficient

Fastighets  Vishay Intertechnology

Average diversification

The 3 months correlation between Fastighets and Vishay is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fastighets AB Balder and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology and Fastighets 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 Fastighets AB Balder are associated (or correlated) with Vishay Intertechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Intertechnology has no effect on the direction of Fastighets i.e., Fastighets and Vishay Intertechnology go up and down completely randomly.

Pair Corralation between Fastighets and Vishay Intertechnology

Assuming the 90 days horizon Fastighets AB Balder is expected to under-perform the Vishay Intertechnology. In addition to that, Fastighets is 1.01 times more volatile than Vishay Intertechnology. It trades about -0.13 of its total potential returns per unit of risk. Vishay Intertechnology is currently generating about -0.03 per unit of volatility. If you would invest  1,881  in Vishay Intertechnology on September 28, 2024 and sell it today you would lose (104.00) from holding Vishay Intertechnology or give up 5.53% of portfolio value over 90 days.

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

Fastighets AB Balder  vs.  Vishay Intertechnology

Fastighets AB Balder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fastighets AB Balder has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 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.

Pair Trading with Fastighets and Vishay Intertechnology

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

The idea behind Fastighets AB Balder and Vishay Intertechnology 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.