Correlation Between Tokyo Electron and Cohu

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Can any of the company-specific risk be diversified away by investing in both Tokyo Electron 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 Tokyo Electron and Cohu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tokyo Electron and Cohu Inc, you can compare the effects of market volatilities on Tokyo Electron 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 Tokyo Electron with a short position of Cohu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokyo Electron and Cohu.

Diversification Opportunities for Tokyo Electron and Cohu

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Tokyo and Cohu is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Tokyo Electron and Cohu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohu Inc and Tokyo Electron 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 Tokyo Electron 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 Tokyo Electron i.e., Tokyo Electron and Cohu go up and down completely randomly.

Pair Corralation between Tokyo Electron and Cohu

Assuming the 90 days horizon Tokyo Electron is expected to generate 1.34 times more return on investment than Cohu. However, Tokyo Electron is 1.34 times more volatile than Cohu Inc. It trades about 0.12 of its potential returns per unit of risk. Cohu Inc is currently generating about 0.04 per unit of risk. If you would invest  24,158  in Tokyo Electron on December 29, 2023 and sell it today you would earn a total of  1,638  from holding Tokyo Electron or generate 6.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Tokyo Electron  vs.  Cohu Inc

 Performance 
       Timeline  
Tokyo Electron 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Tokyo Electron are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, Tokyo Electron reported solid returns over the last few months and may actually be approaching a breakup point.
Cohu Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Cohu Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Tokyo Electron and Cohu Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tokyo Electron and Cohu

The main advantage of trading using opposite Tokyo Electron and Cohu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokyo Electron 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 Tokyo Electron 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.
Check out your portfolio center.
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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