Correlation Between Cohu and FlexShopper
Can any of the company-specific risk be diversified away by investing in both Cohu and FlexShopper 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 FlexShopper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cohu Inc and FlexShopper, you can compare the effects of market volatilities on Cohu and FlexShopper 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 FlexShopper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cohu and FlexShopper.
Diversification Opportunities for Cohu and FlexShopper
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cohu and FlexShopper is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cohu Inc and FlexShopper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShopper 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 FlexShopper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShopper has no effect on the direction of Cohu i.e., Cohu and FlexShopper go up and down completely randomly.
Pair Corralation between Cohu and FlexShopper
Given the investment horizon of 90 days Cohu Inc is expected to under-perform the FlexShopper. But the stock apears to be less risky and, when comparing its historical volatility, Cohu Inc is 2.13 times less risky than FlexShopper. The stock trades about -0.03 of its potential returns per unit of risk. The FlexShopper is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 143.00 in FlexShopper on August 28, 2024 and sell it today you would earn a total of 34.00 from holding FlexShopper or generate 23.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cohu Inc vs. FlexShopper
Performance |
| Timeline |
| Cohu Inc |
| FlexShopper |
Cohu and FlexShopper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cohu and FlexShopper
The main advantage of trading using opposite Cohu and FlexShopper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cohu position performs unexpectedly, FlexShopper 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 FlexShopper will offset losses from the drop in FlexShopper's long position.| Cohu vs. Onto Innovation | Cohu vs. Photronics | Cohu vs. Ultra Clean Holdings | Cohu vs. Axcelis Technologies |
| FlexShopper vs. AZN Capital Corp | FlexShopper vs. Fortress Transportation and | FlexShopper vs. Ashtead Gro | FlexShopper vs. Alta Equipment Group |
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 Correlations module to find global opportunities by holding instruments from different markets.
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