Correlation Between OSI Systems and Viper Networks

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

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

Diversification Opportunities for OSI Systems and Viper Networks

-0.26

Correlation Coefficient

OSI Systems  Viper Networks

Very good diversification

The 3 months correlation between OSI and Viper is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding OSI Systems and Viper Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viper Networks 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 Viper Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viper Networks has no effect on the direction of OSI Systems i.e., OSI Systems and Viper Networks go up and down completely randomly.

Pair Corralation between OSI Systems and Viper Networks

Given the investment horizon of 90 days OSI Systems is expected to generate 11.74 times less return on investment than Viper Networks. But when comparing it to its historical volatility, OSI Systems is 11.32 times less risky than Viper Networks. It trades about 0.1 of its potential returns per unit of risk. Viper Networks is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Viper Networks on December 3, 2024 and sell it today you would lose (0.01) from holding Viper Networks or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

OSI Systems  vs.  Viper Networks

OSI Systems

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OSI Systems are ranked lower than 6 (%) 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.

Viper Networks

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Viper Networks are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, Viper Networks reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OSI Systems and Viper Networks

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

The idea behind OSI Systems and Viper Networks 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.