Correlation Between OSI Systems and LSI Industries
Can any of the company-specific risk be diversified away by investing in both OSI Systems and LSI Industries 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 OSI Systems and LSI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OSI Systems and LSI Industries, you can compare the effects of market volatilities on OSI Systems and LSI Industries 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 OSI Systems with a short position of LSI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of OSI Systems and LSI Industries.
Diversification Opportunities for OSI Systems and LSI Industries
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OSI and LSI is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding OSI Systems and LSI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LSI Industries and OSI Systems 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 OSI Systems are associated (or correlated) with LSI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LSI Industries has no effect on the direction of OSI Systems i.e., OSI Systems and LSI Industries go up and down completely randomly.
Pair Corralation between OSI Systems and LSI Industries
Given the investment horizon of 90 days OSI Systems is expected to generate 0.92 times more return on investment than LSI Industries. However, OSI Systems is 1.08 times less risky than LSI Industries. It trades about 0.53 of its potential returns per unit of risk. LSI Industries is currently generating about 0.44 per unit of risk. If you would invest 13,141 in OSI Systems on August 27, 2024 and sell it today you would earn a total of 3,758 from holding OSI Systems or generate 28.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OSI Systems vs. LSI Industries
Performance |
| Timeline |
| OSI Systems |
| LSI Industries |
OSI Systems and LSI Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OSI Systems and LSI Industries
The main advantage of trading using opposite OSI Systems and LSI Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OSI Systems position performs unexpectedly, LSI Industries 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 LSI Industries will offset losses from the drop in LSI Industries' long position.| OSI Systems vs. Plexus Corp | OSI Systems vs. Jabil Circuit | OSI Systems vs. Sanmina | OSI Systems vs. Methode Electronics |
| LSI Industries vs. Plexus Corp | LSI Industries vs. OSI Systems | LSI Industries vs. CTS Corporation | LSI Industries vs. Benchmark Electronics |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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