Correlation Between CDW Corp and Cohu

Can any of the company-specific risk be diversified away by investing in both CDW Corp 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 CDW Corp and Cohu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CDW Corp and Cohu Inc, you can compare the effects of market volatilities on CDW Corp 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 CDW Corp with a short position of Cohu. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Cohu.

Diversification Opportunities for CDW Corp and Cohu

-0.37

Correlation Coefficient

CDW Corp  Cohu

Very good diversification

The 3 months correlation between CDW and Cohu is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Cohu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohu Inc and CDW Corp 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 CDW 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 CDW Corp i.e., CDW Corp and Cohu go up and down completely randomly.

Pair Corralation between CDW Corp and Cohu

Considering the 90-day investment horizon CDW Corp is expected to generate 0.67 times more return on investment than Cohu. However, CDW Corp is 1.5 times less risky than Cohu. It trades about 0.02 of its potential returns per unit of risk. Cohu Inc is currently generating about -0.02 per unit of risk. If you would invest  16,435  in CDW Corp on August 31, 2024 and sell it today you would earn a total of  1,240  from holding CDW Corp or generate 7.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CDW Corp  vs.  Cohu Inc

CDW Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CDW Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Cohu Inc

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cohu Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Cohu is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CDW Corp and Cohu

The main advantage of trading using opposite CDW Corp and Cohu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp 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 CDW Corp 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..