Correlation Between Corning Incorporated and OSI Systems

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

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

Diversification Opportunities for Corning Incorporated and OSI Systems

0.32

Correlation Coefficient

Corning Incorporated  OSI Systems

Weak diversification

The 3 months correlation between Corning and OSI is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Corning Incorporated and OSI Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSI Systems and Corning Incorporated 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 Corning Incorporated are associated (or correlated) with OSI Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSI Systems has no effect on the direction of Corning Incorporated i.e., Corning Incorporated and OSI Systems go up and down completely randomly.

Pair Corralation between Corning Incorporated and OSI Systems

Considering the 90-day investment horizon Corning Incorporated is expected to generate 1.16 times less return on investment than OSI Systems. But when comparing it to its historical volatility, Corning Incorporated is 1.39 times less risky than OSI Systems. It trades about 0.21 of its potential returns per unit of risk. OSI Systems is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  14,173  in OSI Systems on August 31, 2024 and sell it today you would earn a total of  3,278  from holding OSI Systems or generate 23.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Corning Incorporated  vs.  OSI Systems

Corning Incorporated

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Corning Incorporated are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Corning Incorporated showed solid returns over the last few months and may actually be approaching a breakup point.

OSI Systems

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with Corning Incorporated and OSI Systems

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

The idea behind Corning Incorporated and OSI Systems 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..