Correlation Between Ultra Clean and Cohu
Can any of the company-specific risk be diversified away by investing in both Ultra Clean 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 Ultra Clean and Cohu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Clean Holdings and Cohu Inc, you can compare the effects of market volatilities on Ultra Clean 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 Ultra Clean with a short position of Cohu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Cohu.
Diversification Opportunities for Ultra Clean and Cohu
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ultra and Cohu is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Cohu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohu Inc and Ultra Clean 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 Ultra Clean Holdings 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 Ultra Clean i.e., Ultra Clean and Cohu go up and down completely randomly.
Pair Corralation between Ultra Clean and Cohu
Given the investment horizon of 90 days Ultra Clean Holdings is expected to generate 0.95 times more return on investment than Cohu. However, Ultra Clean Holdings is 1.05 times less risky than Cohu. It trades about 0.11 of its potential returns per unit of risk. Cohu Inc is currently generating about 0.02 per unit of risk. If you would invest 3,505 in Ultra Clean Holdings on August 27, 2024 and sell it today you would earn a total of 225.00 from holding Ultra Clean Holdings or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Clean Holdings vs. Cohu Inc
Performance |
| Timeline |
| Ultra Clean Holdings |
| Cohu Inc |
Ultra Clean and Cohu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and Cohu
The main advantage of trading using opposite Ultra Clean and Cohu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean 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.The idea behind Ultra Clean Holdings and Cohu Inc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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