Correlation Between Rambus and Cohu

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

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

Diversification Opportunities for Rambus and Cohu

0.74

Correlation Coefficient

Rambus  Cohu

Poor diversification

The 3 months correlation between Rambus and Cohu is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Rambus Inc and Cohu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohu Inc and Rambus 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 Rambus Inc 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 Rambus i.e., Rambus and Cohu go up and down completely randomly.

Pair Corralation between Rambus and Cohu

Given the investment horizon of 90 days Rambus Inc is expected to generate 1.35 times more return on investment than Cohu. However, Rambus is 1.35 times more volatile than Cohu Inc. It trades about 0.17 of its potential returns per unit of risk. Cohu Inc is currently generating about 0.04 per unit of risk. If you would invest  4,058  in Rambus Inc on September 2, 2024 and sell it today you would earn a total of  1,723  from holding Rambus Inc or generate 42.46% return on investment over 90 days.

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

Rambus Inc  vs.  Cohu Inc

Rambus Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rambus Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental drivers, Rambus unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Rambus and Cohu

The main advantage of trading using opposite Rambus and Cohu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rambus 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 Rambus Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..