Correlation Between OSI Systems and Belden

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

By analyzing existing cross correlation between OSI Systems and Belden Inc, you can compare the effects of market volatilities on OSI Systems and Belden 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 Belden. Check out your portfolio center. Please also check ongoing floating volatility patterns of OSI Systems and Belden.

Diversification Opportunities for OSI Systems and Belden

0.6

Correlation Coefficient

OSI Systems  Belden

Poor diversification

The 3 months correlation between OSI and Belden is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding OSI Systems and Belden Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belden Inc 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 Belden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belden Inc has no effect on the direction of OSI Systems i.e., OSI Systems and Belden go up and down completely randomly.

Pair Corralation between OSI Systems and Belden

Given the investment horizon of 90 days OSI Systems is expected to under-perform the Belden. But the stock apears to be less risky and, when comparing its historical volatility, OSI Systems is 1.33 times less risky than Belden. The stock trades about -0.11 of its potential returns per unit of risk. The Belden Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  8,897  in Belden Inc on February 5, 2024 and sell it today you would lose (74.00) from holding Belden Inc or give up 0.83% of portfolio value over 90 days.

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

OSI Systems  vs.  Belden Inc

OSI Systems

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OSI Systems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward indicators, OSI Systems may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Belden Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Belden Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Belden exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OSI Systems and Belden

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

The idea behind OSI Systems and Belden 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.