Correlation Between Lam Research and Cohu
Can any of the company-specific risk be diversified away by investing in both Lam Research and Cohu 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 Lam Research and Cohu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lam Research Corp and Cohu Inc, you can compare the effects of market volatilities on Lam Research and Cohu 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 Lam Research with a short position of Cohu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lam Research and Cohu.
Diversification Opportunities for Lam Research and Cohu
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lam and Cohu is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lam Research Corp and Cohu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohu Inc and Lam Research 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 Lam Research Corp are associated (or correlated) with Cohu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohu Inc has no effect on the direction of Lam Research i.e., Lam Research and Cohu go up and down completely randomly.
Pair Corralation between Lam Research and Cohu
Given the investment horizon of 90 days Lam Research Corp is expected to under-perform the Cohu. In addition to that, Lam Research is 1.1 times more volatile than Cohu Inc. It trades about -0.05 of its total potential returns per unit of risk. Cohu Inc is currently generating about -0.04 per unit of volatility. If you would invest 3,172 in Cohu Inc on August 24, 2024 and sell it today you would lose (562.00) from holding Cohu Inc or give up 17.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Lam Research Corp vs. Cohu Inc
Performance |
| Timeline |
| Lam Research Corp |
| Cohu Inc |
Lam Research and Cohu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lam Research and Cohu
The main advantage of trading using opposite Lam Research and Cohu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lam Research position performs unexpectedly, Cohu 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 Cohu will offset losses from the drop in Cohu's long position.| Lam Research vs. ASML Holding NV | Lam Research vs. KLA Tencor | Lam Research vs. Axcelis Technologies | Lam Research vs. Teradyne |
| Cohu vs. Onto Innovation | Cohu vs. Photronics | Cohu vs. Ultra Clean Holdings | Cohu vs. Axcelis Technologies |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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