Correlation Between USU Software and Vishay Intertechnology

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

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

Diversification Opportunities for USU Software and Vishay Intertechnology

-0.37

Correlation Coefficient

USU Software  Vishay Intertechnology

Very good diversification

The 3 months correlation between USU and Vishay is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding USU Software AG and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology and USU Software 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 USU Software AG 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 USU Software i.e., USU Software and Vishay Intertechnology go up and down completely randomly.

Pair Corralation between USU Software and Vishay Intertechnology

Assuming the 90 days trading horizon USU Software AG is expected to generate 0.94 times more return on investment than Vishay Intertechnology. However, USU Software AG is 1.06 times less risky than Vishay Intertechnology. It trades about 0.16 of its potential returns per unit of risk. Vishay Intertechnology is currently generating about 0.05 per unit of risk. If you would invest  1,750  in USU Software AG on September 3, 2024 and sell it today you would earn a total of  460.00  from holding USU Software AG or generate 26.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

USU Software AG  vs.  Vishay Intertechnology

USU Software AG

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USU Software AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, USU Software reported solid returns over the last few months and may actually be approaching a breakup point.

Vishay Intertechnology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vishay Intertechnology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Vishay Intertechnology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with USU Software and Vishay Intertechnology

The main advantage of trading using opposite USU Software and Vishay Intertechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USU Software 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 USU Software AG 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.