Correlation Between Universal Display and Vishay Precision

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

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

Diversification Opportunities for Universal Display and Vishay Precision

0.59

Correlation Coefficient

Universal Display  Vishay Precision

Very weak diversification

The 3 months correlation between Universal and Vishay is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Vishay Precision Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Precision and Universal Display 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 Universal Display are associated (or correlated) with Vishay Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Precision has no effect on the direction of Universal Display i.e., Universal Display and Vishay Precision go up and down completely randomly.

Pair Corralation between Universal Display and Vishay Precision

Given the investment horizon of 90 days Universal Display is expected to generate 11.56 times less return on investment than Vishay Precision. But when comparing it to its historical volatility, Universal Display is 1.38 times less risky than Vishay Precision. It trades about 0.01 of its potential returns per unit of risk. Vishay Precision Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,290  in Vishay Precision Group on May 7, 2025 and sell it today you would earn a total of  317.00  from holding Vishay Precision Group or generate 13.84% return on investment over 90 days.

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

Universal Display  vs.  Vishay Precision Group

Universal Display

Risk-Adjusted Performance

Weak

Over the last 90 days Universal Display has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Universal Display is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Vishay Precision

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vishay Precision Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vishay Precision reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Universal Display and Vishay Precision

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

The idea behind Universal Display and Vishay Precision Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.