Correlation Between Interlink Electronics and Ouster

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

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

Diversification Opportunities for Interlink Electronics and Ouster

-0.84

Correlation Coefficient

Interlink Electronics  Ouster

Pay attention - limited upside

The 3 months correlation between Interlink and Ouster is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Interlink Electronics and Ouster Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ouster Inc and Interlink Electronics 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 Interlink Electronics are associated (or correlated) with Ouster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ouster Inc has no effect on the direction of Interlink Electronics i.e., Interlink Electronics and Ouster go up and down completely randomly.

Pair Corralation between Interlink Electronics and Ouster

Given the investment horizon of 90 days Interlink Electronics is expected to under-perform the Ouster. But the stock apears to be less risky and, when comparing its historical volatility, Interlink Electronics is 1.63 times less risky than Ouster. The stock trades about -0.2 of its potential returns per unit of risk. The Ouster Inc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  580.00  in Ouster Inc on February 16, 2024 and sell it today you would earn a total of  618.00  from holding Ouster Inc or generate 106.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Interlink Electronics  vs.  Ouster Inc

Interlink Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interlink Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ouster Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ouster Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Ouster unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Interlink Electronics and Ouster

The main advantage of trading using opposite Interlink Electronics and Ouster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interlink Electronics position performs unexpectedly, Ouster 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 Ouster will offset losses from the drop in Ouster's long position.

The idea behind Interlink Electronics and Ouster 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.