Correlation Between Teradyne and Cohu

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

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

Diversification Opportunities for Teradyne and Cohu

0.92

Correlation Coefficient

Teradyne  Cohu

Almost no diversification

The 3 months correlation between Teradyne and Cohu is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Cohu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohu Inc and Teradyne 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 Teradyne 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 Teradyne i.e., Teradyne and Cohu go up and down completely randomly.

Pair Corralation between Teradyne and Cohu

Considering the 90-day investment horizon Teradyne is expected to generate 1.09 times more return on investment than Cohu. However, Teradyne is 1.09 times more volatile than Cohu Inc. It trades about -0.19 of its potential returns per unit of risk. Cohu Inc is currently generating about -0.28 per unit of risk. If you would invest  12,657  in Teradyne on December 28, 2024 and sell it today you would lose (4,379) from holding Teradyne or give up 34.6% of portfolio value over 90 days.

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

Teradyne  vs.  Cohu Inc

Teradyne

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teradyne has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Cohu Inc

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Teradyne and Cohu

The main advantage of trading using opposite Teradyne and Cohu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne 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 Teradyne 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.