Correlation Between Cohu and BE Semiconductor

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

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

Diversification Opportunities for Cohu and BE Semiconductor

-0.28

Correlation Coefficient

Cohu  BE Semiconductor

Very good diversification

The 3 months correlation between Cohu and BESVF is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Cohu Inc and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind 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 BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of Cohu i.e., Cohu and BE Semiconductor go up and down completely randomly.

Pair Corralation between Cohu and BE Semiconductor

Given the investment horizon of 90 days Cohu Inc is expected to generate 0.9 times more return on investment than BE Semiconductor. However, Cohu Inc is 1.11 times less risky than BE Semiconductor. It trades about 0.04 of its potential returns per unit of risk. BE Semiconductor Industries is currently generating about -0.01 per unit of risk. If you would invest  2,528  in Cohu Inc on September 2, 2024 and sell it today you would earn a total of  112.00  from holding Cohu Inc or generate 4.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Cohu Inc  vs.  BE Semiconductor Industries

Cohu Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cohu Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical indicators, Cohu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BE Semiconductor Ind

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BE Semiconductor Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BE Semiconductor is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cohu and BE Semiconductor

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

The idea behind Cohu Inc and BE Semiconductor Industries 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.