Correlation Between Sunny Optical and OSI Systems

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

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

Diversification Opportunities for Sunny Optical and OSI Systems

0.74

Correlation Coefficient

Sunny Optical  OSI Systems

Poor diversification

The 3 months correlation between Sunny and OSI is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and OSI Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSI Systems and Sunny Optical 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 Sunny Optical Technology 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 Sunny Optical i.e., Sunny Optical and OSI Systems go up and down completely randomly.

Pair Corralation between Sunny Optical and OSI Systems

Assuming the 90 days horizon Sunny Optical Technology is expected to under-perform the OSI Systems. In addition to that, Sunny Optical is 2.45 times more volatile than OSI Systems. It trades about 0.0 of its total potential returns per unit of risk. OSI Systems is currently generating about 0.07 per unit of volatility. If you would invest  9,012  in OSI Systems on October 10, 2024 and sell it today you would earn a total of  7,328  from holding OSI Systems or generate 81.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	68.48%
Values	Daily Returns

Sunny Optical Technology  vs.  OSI Systems

Sunny Optical Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sunny Optical reported solid returns over the last few months and may actually be approaching a breakup point.

OSI Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OSI Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward indicators, OSI Systems may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sunny Optical and OSI Systems

The main advantage of trading using opposite Sunny Optical and OSI Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical 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 Sunny Optical Technology 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.