Correlation Between Quantum and OSI Systems

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

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

Diversification Opportunities for Quantum and OSI Systems

0.67

Correlation Coefficient

Quantum  OSI Systems

Poor diversification

The 3 months correlation between Quantum and OSI is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Quantum and OSI Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSI Systems and Quantum 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 Quantum 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 Quantum i.e., Quantum and OSI Systems go up and down completely randomly.

Pair Corralation between Quantum and OSI Systems

Given the investment horizon of 90 days Quantum is expected to generate 24.22 times more return on investment than OSI Systems. However, Quantum is 24.22 times more volatile than OSI Systems. It trades about 0.24 of its potential returns per unit of risk. OSI Systems is currently generating about 0.11 per unit of risk. If you would invest  1,723  in Quantum on September 27, 2024 and sell it today you would earn a total of  2,769  from holding Quantum or generate 160.71% return on investment over 90 days.

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

Quantum  vs.  OSI Systems

Quantum

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Quantum displayed solid returns over the last few months and may actually be approaching a breakup point.

OSI Systems

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OSI Systems are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, OSI Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quantum and OSI Systems

The main advantage of trading using opposite Quantum and OSI Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quantum 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 Quantum 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.