Correlation Between OSI Systems and EMCORE

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

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

Diversification Opportunities for OSI Systems and EMCORE

-0.42

Correlation Coefficient

OSI Systems  EMCORE

Very good diversification

The 3 months correlation between OSI and EMCORE is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding OSI Systems and EMCORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCORE 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 EMCORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCORE has no effect on the direction of OSI Systems i.e., OSI Systems and EMCORE go up and down completely randomly.

Pair Corralation between OSI Systems and EMCORE

Given the investment horizon of 90 days OSI Systems is expected to generate 0.18 times more return on investment than EMCORE. However, OSI Systems is 5.53 times less risky than EMCORE. It trades about 0.06 of its potential returns per unit of risk. EMCORE is currently generating about -0.19 per unit of risk. If you would invest  13,279  in OSI Systems on February 20, 2024 and sell it today you would earn a total of  648.00  from holding OSI Systems or generate 4.88% return on investment over 90 days.

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

OSI Systems  vs.  EMCORE

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 stable forward indicators, OSI Systems is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

EMCORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMCORE has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with OSI Systems and EMCORE

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

The idea behind OSI Systems and EMCORE 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.