Correlation Between OSI Systems and Plexus Corp
Can any of the company-specific risk be diversified away by investing in both OSI Systems and Plexus Corp 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 Plexus Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OSI Systems and Plexus Corp, you can compare the effects of market volatilities on OSI Systems and Plexus Corp 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 Plexus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of OSI Systems and Plexus Corp.
Diversification Opportunities for OSI Systems and Plexus Corp
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between OSI and Plexus is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding OSI Systems and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus Corp 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 Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of OSI Systems i.e., OSI Systems and Plexus Corp go up and down completely randomly.
Pair Corralation between OSI Systems and Plexus Corp
Given the investment horizon of 90 days OSI Systems is expected to generate 1.09 times less return on investment than Plexus Corp. But when comparing it to its historical volatility, OSI Systems is 1.15 times less risky than Plexus Corp. It trades about 0.27 of its potential returns per unit of risk. Plexus Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 13,557 in Plexus Corp on August 24, 2024 and sell it today you would earn a total of 2,406 from holding Plexus Corp or generate 17.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OSI Systems vs. Plexus Corp
Performance |
| Timeline |
| OSI Systems |
| Plexus Corp |
OSI Systems and Plexus Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OSI Systems and Plexus Corp
The main advantage of trading using opposite OSI Systems and Plexus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OSI Systems position performs unexpectedly, Plexus Corp 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 Plexus Corp will offset losses from the drop in Plexus Corp's long position.| OSI Systems vs. Sanmina | OSI Systems vs. Benchmark Electronics | OSI Systems vs. Methode Electronics | OSI Systems vs. Celestica |
| Plexus Corp vs. Celestica | Plexus Corp vs. Benchmark Electronics | Plexus Corp vs. Flex | Plexus Corp vs. Jabil Circuit |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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