Correlation Between Servotech Power and Osia Hyper

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

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

Diversification Opportunities for Servotech Power and Osia Hyper

0.34

Correlation Coefficient

Servotech Power  Osia Hyper

Weak diversification

The 3 months correlation between Servotech and Osia is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Servotech Power Systems and Osia Hyper Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osia Hyper Retail and Servotech Power 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 Servotech Power Systems are associated (or correlated) with Osia Hyper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osia Hyper Retail has no effect on the direction of Servotech Power i.e., Servotech Power and Osia Hyper go up and down completely randomly.

Pair Corralation between Servotech Power and Osia Hyper

Assuming the 90 days trading horizon Servotech Power Systems is expected to generate 1.36 times more return on investment than Osia Hyper. However, Servotech Power is 1.36 times more volatile than Osia Hyper Retail. It trades about 0.12 of its potential returns per unit of risk. Osia Hyper Retail is currently generating about 0.02 per unit of risk. If you would invest  14,185  in Servotech Power Systems on September 2, 2024 and sell it today you would earn a total of  3,716  from holding Servotech Power Systems or generate 26.2% return on investment over 90 days.

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

Servotech Power Systems  vs.  Osia Hyper Retail

Servotech Power Systems

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Servotech Power Systems are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Servotech Power exhibited solid returns over the last few months and may actually be approaching a breakup point.

Osia Hyper Retail

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Osia Hyper Retail are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Osia Hyper is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Servotech Power and Osia Hyper

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

The idea behind Servotech Power Systems and Osia Hyper Retail 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.