Correlation Between Osisko Development and Friedman Industries

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

By analyzing existing cross correlation between Osisko Development Corp and Friedman Industries, you can compare the effects of market volatilities on Osisko Development and Friedman Industries 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 Osisko Development with a short position of Friedman Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osisko Development and Friedman Industries.

Diversification Opportunities for Osisko Development and Friedman Industries

-0.32

Correlation Coefficient

Osisko Development  Friedman Industries

Very good diversification

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

Pair Corralation between Osisko Development and Friedman Industries

Considering the 90-day investment horizon Osisko Development Corp is expected to under-perform the Friedman Industries. But the stock apears to be less risky and, when comparing its historical volatility, Osisko Development Corp is 1.18 times less risky than Friedman Industries. The stock trades about -0.03 of its potential returns per unit of risk. The Friedman Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,502  in Friedman Industries on December 28, 2024 and sell it today you would earn a total of  68.00  from holding Friedman Industries or generate 4.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Osisko Development Corp  vs.  Friedman Industries

Osisko Development Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Osisko Development Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Osisko Development is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Friedman Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Friedman Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Friedman Industries may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Osisko Development and Friedman Industries

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

The idea behind Osisko Development Corp and Friedman Industries 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.