Correlation Between LSI Industries and OSI Systems
Can any of the company-specific risk be diversified away by investing in both LSI Industries 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 LSI Industries and OSI Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LSI Industries and OSI Systems, you can compare the effects of market volatilities on LSI Industries 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 LSI Industries with a short position of OSI Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of LSI Industries and OSI Systems.
Diversification Opportunities for LSI Industries and OSI Systems
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LSI and OSI is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding LSI Industries and OSI Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSI Systems and LSI Industries 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 LSI Industries 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 LSI Industries i.e., LSI Industries and OSI Systems go up and down completely randomly.
Pair Corralation between LSI Industries and OSI Systems
Given the investment horizon of 90 days LSI Industries is expected to generate 1.5 times more return on investment than OSI Systems. However, LSI Industries is 1.5 times more volatile than OSI Systems. It trades about 0.23 of its potential returns per unit of risk. OSI Systems is currently generating about 0.14 per unit of risk. If you would invest 1,979 in LSI Industries on October 26, 2024 and sell it today you would earn a total of 493.00 from holding LSI Industries or generate 24.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LSI Industries vs. OSI Systems
Performance |
| Timeline |
| LSI Industries |
| OSI Systems |
LSI Industries and OSI Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LSI Industries and OSI Systems
The main advantage of trading using opposite LSI Industries and OSI Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LSI Industries 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.| LSI Industries vs. Plexus Corp | LSI Industries vs. OSI Systems | LSI Industries vs. CTS Corporation | LSI Industries vs. Benchmark Electronics |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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