Correlation Between Cohu and Ambarella
Can any of the company-specific risk be diversified away by investing in both Cohu and Ambarella 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 Cohu and Ambarella into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cohu Inc and Ambarella, you can compare the effects of market volatilities on Cohu and Ambarella 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 Cohu with a short position of Ambarella. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cohu and Ambarella.
Diversification Opportunities for Cohu and Ambarella
Very weak diversification
The 3 months correlation between Cohu and Ambarella is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cohu Inc and Ambarella in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambarella and Cohu 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 Cohu Inc are associated (or correlated) with Ambarella. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambarella has no effect on the direction of Cohu i.e., Cohu and Ambarella go up and down completely randomly.
Pair Corralation between Cohu and Ambarella
Given the investment horizon of 90 days Cohu Inc is expected to under-perform the Ambarella. But the stock apears to be less risky and, when comparing its historical volatility, Cohu Inc is 1.22 times less risky than Ambarella. The stock trades about -0.02 of its potential returns per unit of risk. The Ambarella is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,528 in Ambarella on August 24, 2024 and sell it today you would earn a total of 602.00 from holding Ambarella or generate 10.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cohu Inc vs. Ambarella
Performance |
| Timeline |
| Cohu Inc |
| Ambarella |
Cohu and Ambarella Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cohu and Ambarella
The main advantage of trading using opposite Cohu and Ambarella positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cohu position performs unexpectedly, Ambarella 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 Ambarella will offset losses from the drop in Ambarella's long position.| Cohu vs. Amtech Systems | Cohu vs. Veeco Instruments | Cohu vs. Ichor Holdings | Cohu vs. Axcelis Technologies |
| Ambarella vs. Axcelis Technologies | Ambarella vs. Kulicke and Soffa | Ambarella vs. Ultra Clean Holdings | Ambarella vs. Cohu Inc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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