Correlation Between Ostin Technology and Methode Electronics

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

By analyzing existing cross correlation between Ostin Technology Group and Methode Electronics, you can compare the effects of market volatilities on Ostin Technology and Methode Electronics 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 Ostin Technology with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ostin Technology and Methode Electronics.

Diversification Opportunities for Ostin Technology and Methode Electronics

0.31

Correlation Coefficient

Ostin Technology  Methode Electronics

Weak diversification

The 3 months correlation between Ostin and Methode is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ostin Technology Group and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and Ostin Technology 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 Ostin Technology Group are associated (or correlated) with Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of Ostin Technology i.e., Ostin Technology and Methode Electronics go up and down completely randomly.

Pair Corralation between Ostin Technology and Methode Electronics

Considering the 90-day investment horizon Ostin Technology Group is expected to generate 1.23 times more return on investment than Methode Electronics. However, Ostin Technology is 1.23 times more volatile than Methode Electronics. It trades about -0.03 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.14 per unit of risk. If you would invest  227.00  in Ostin Technology Group on December 28, 2024 and sell it today you would lose (48.00) from holding Ostin Technology Group or give up 21.15% of portfolio value over 90 days.

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

Ostin Technology Group  vs.  Methode Electronics

Ostin Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ostin Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Methode Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Methode Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Ostin Technology and Methode Electronics

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

The idea behind Ostin Technology Group and Methode Electronics 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 Transaction History module to view history of all your transactions and understand their impact on performance.