Correlation Between Ouster and TE Connectivity

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

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

Diversification Opportunities for Ouster and TE Connectivity

0.44

Correlation Coefficient

Ouster  TE Connectivity

Very weak diversification

The 3 months correlation between Ouster and TEL is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ouster Inc and TE Connectivity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TE Connectivity and Ouster 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 Ouster Inc are associated (or correlated) with TE Connectivity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TE Connectivity has no effect on the direction of Ouster i.e., Ouster and TE Connectivity go up and down completely randomly.

Pair Corralation between Ouster and TE Connectivity

Given the investment horizon of 90 days Ouster Inc is expected to generate 4.9 times more return on investment than TE Connectivity. However, Ouster is 4.9 times more volatile than TE Connectivity. It trades about 0.03 of its potential returns per unit of risk. TE Connectivity is currently generating about 0.05 per unit of risk. If you would invest  966.00  in Ouster Inc on September 21, 2024 and sell it today you would earn a total of  76.00  from holding Ouster Inc or generate 7.87% return on investment over 90 days.

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

Ouster Inc  vs.  TE Connectivity

Ouster Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ouster Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Ouster unveiled solid returns over the last few months and may actually be approaching a breakup point.

TE Connectivity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TE Connectivity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, TE Connectivity is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ouster and TE Connectivity

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

The idea behind Ouster Inc and TE Connectivity 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.