Correlation Between Cohu and KLA Tencor
Can any of the company-specific risk be diversified away by investing in both Cohu and KLA Tencor 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 KLA Tencor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cohu Inc and KLA Tencor, you can compare the effects of market volatilities on Cohu and KLA Tencor 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 KLA Tencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cohu and KLA Tencor.
Diversification Opportunities for Cohu and KLA Tencor
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cohu and KLA is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cohu Inc and KLA Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Tencor 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 KLA Tencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Tencor has no effect on the direction of Cohu i.e., Cohu and KLA Tencor go up and down completely randomly.
Pair Corralation between Cohu and KLA Tencor
Given the investment horizon of 90 days Cohu Inc is expected to generate 1.56 times more return on investment than KLA Tencor. However, Cohu is 1.56 times more volatile than KLA Tencor. It trades about 0.02 of its potential returns per unit of risk. KLA Tencor is currently generating about -0.11 per unit of risk. If you would invest 2,647 in Cohu Inc on August 27, 2024 and sell it today you would earn a total of 18.00 from holding Cohu Inc or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cohu Inc vs. KLA Tencor
Performance |
| Timeline |
| Cohu Inc |
| KLA Tencor |
Cohu and KLA Tencor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cohu and KLA Tencor
The main advantage of trading using opposite Cohu and KLA Tencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cohu position performs unexpectedly, KLA Tencor 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 KLA Tencor will offset losses from the drop in KLA Tencor's long position.The idea behind Cohu Inc and KLA Tencor 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.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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