Correlation Between Cohu and Onto Innovation

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

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

Diversification Opportunities for Cohu and Onto Innovation

-0.26

Correlation Coefficient

Cohu  Onto Innovation

Very good diversification

The 3 months correlation between Cohu and Onto is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cohu Inc and Onto Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onto Innovation 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 Onto Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onto Innovation has no effect on the direction of Cohu i.e., Cohu and Onto Innovation go up and down completely randomly.

Pair Corralation between Cohu and Onto Innovation

Given the investment horizon of 90 days Cohu Inc is expected to generate 0.79 times more return on investment than Onto Innovation. However, Cohu Inc is 1.27 times less risky than Onto Innovation. It trades about 0.03 of its potential returns per unit of risk. Onto Innovation is currently generating about -0.05 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.  Onto Innovation

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.

Onto Innovation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Onto Innovation 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Cohu and Onto Innovation

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

The idea behind Cohu Inc and Onto Innovation 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.