Correlation Between Bel Fuse and OSI Systems
Can any of the company-specific risk be diversified away by investing in both Bel Fuse and OSI Systems 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 Bel Fuse and OSI Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bel Fuse A and OSI Systems, you can compare the effects of market volatilities on Bel Fuse and OSI Systems 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 Bel Fuse with a short position of OSI Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and OSI Systems.
Diversification Opportunities for Bel Fuse and OSI Systems
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bel and OSI is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse A and OSI Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSI Systems and Bel Fuse 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 Bel Fuse A are associated (or correlated) with OSI Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSI Systems has no effect on the direction of Bel Fuse i.e., Bel Fuse and OSI Systems go up and down completely randomly.
Pair Corralation between Bel Fuse and OSI Systems
Assuming the 90 days horizon Bel Fuse A is expected to under-perform the OSI Systems. But the stock apears to be less risky and, when comparing its historical volatility, Bel Fuse A is 1.27 times less risky than OSI Systems. The stock trades about -0.17 of its potential returns per unit of risk. The OSI Systems is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 14,215 in OSI Systems on August 24, 2024 and sell it today you would earn a total of 2,318 from holding OSI Systems or generate 16.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bel Fuse A vs. OSI Systems
Performance |
| Timeline |
| Bel Fuse A |
| OSI Systems |
Bel Fuse and OSI Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bel Fuse and OSI Systems
The main advantage of trading using opposite Bel Fuse and OSI Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse position performs unexpectedly, OSI Systems 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 OSI Systems will offset losses from the drop in OSI Systems' long position.The idea behind Bel Fuse A and OSI Systems 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.| OSI Systems vs. Sanmina | OSI Systems vs. Benchmark Electronics | OSI Systems vs. Methode Electronics | OSI Systems vs. Celestica |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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