Correlation Between Nova and Cohu

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

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

Diversification Opportunities for Nova and Cohu

-0.17

Correlation Coefficient

Nova  Cohu

Good diversification

The 3 months correlation between Nova and Cohu is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nova and Cohu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohu Inc and Nova 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 Nova 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 Nova i.e., Nova and Cohu go up and down completely randomly.

Pair Corralation between Nova and Cohu

Given the investment horizon of 90 days Nova is expected to under-perform the Cohu. In addition to that, Nova is 1.09 times more volatile than Cohu Inc. It trades about -0.16 of its total potential returns per unit of risk. Cohu Inc is currently generating about -0.01 per unit of volatility. If you would invest  2,655  in Cohu Inc on August 30, 2024 and sell it today you would lose (57.00) from holding Cohu Inc or give up 2.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Nova  vs.  Cohu Inc

Nova

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Cohu Inc

Risk-Adjusted Performance

0 of 100

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 comparatively stable technical indicators, Cohu is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nova and Cohu

The main advantage of trading using opposite Nova and Cohu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova 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 Nova 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 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.