Correlation Between Cohu and Asm Pacific

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

By analyzing existing cross correlation between Cohu Inc and Asm Pacific Technology, you can compare the effects of market volatilities on Cohu and Asm Pacific 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 Asm Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cohu and Asm Pacific.

Diversification Opportunities for Cohu and Asm Pacific

-0.14

Correlation Coefficient

Cohu  Asm Pacific

Good diversification

The 3 months correlation between Cohu and Asm is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cohu Inc and Asm Pacific Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asm Pacific Technology 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 Asm Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asm Pacific Technology has no effect on the direction of Cohu i.e., Cohu and Asm Pacific go up and down completely randomly.

Pair Corralation between Cohu and Asm Pacific

Given the investment horizon of 90 days Cohu Inc is expected to generate 1.04 times more return on investment than Asm Pacific. However, Cohu is 1.04 times more volatile than Asm Pacific Technology. It trades about 0.03 of its potential returns per unit of risk. Asm Pacific Technology is currently generating about -0.07 per unit of risk. If you would invest  2,528  in Cohu Inc on August 31, 2024 and sell it today you would earn a total of  70.00  from holding Cohu Inc or generate 2.77% 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.  Asm Pacific Technology

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.

Asm Pacific Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asm Pacific Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Cohu and Asm Pacific

The main advantage of trading using opposite Cohu and Asm Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cohu position performs unexpectedly, Asm Pacific 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 Asm Pacific will offset losses from the drop in Asm Pacific's long position.

The idea behind Cohu Inc and Asm Pacific Technology 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.