Correlation Between Microsoft and OSI Systems
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and OSI Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and OSI Systems, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of OSI Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and OSI Systems.
Diversification Opportunities for Microsoft and OSI Systems
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and OSI is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and OSI Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSI Systems and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and OSI Systems go up and down completely randomly.
Pair Corralation between Microsoft and OSI Systems
Given the investment horizon of 90 days Microsoft is expected to generate 0.57 times more return on investment than OSI Systems. However, Microsoft is 1.75 times less risky than OSI Systems. It trades about 0.4 of its potential returns per unit of risk. OSI Systems is currently generating about 0.06 per unit of risk. If you would invest 36,711 in Microsoft on April 17, 2025 and sell it today you would earn a total of 13,871 from holding Microsoft or generate 37.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. OSI Systems
Performance |
| Timeline |
| Microsoft |
| OSI Systems |
Microsoft and OSI Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and OSI Systems
The main advantage of trading using opposite Microsoft and OSI Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palantir Technologies Class | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Oracle | Microsoft vs. CoreWeave, Class A |
| OSI Systems vs. Sanmina | OSI Systems vs. Benchmark Electronics | OSI Systems vs. Methode Electronics | OSI Systems vs. Celestica |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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