Correlation Between Bel Fuse and OSI Systems

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Can any of the company-specific risk be diversified away by investing in both Bel Fuse 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 Bel Fuse and OSI Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bel Fuse B and OSI Systems, you can compare the effects of market volatilities on Bel Fuse 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 Bel Fuse with a short position of OSI Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and OSI Systems.

Diversification Opportunities for Bel Fuse and OSI Systems

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Bel and OSI is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse B and OSI Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSI Systems and Bel Fuse 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 Bel Fuse B 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 Bel Fuse i.e., Bel Fuse and OSI Systems go up and down completely randomly.

Pair Corralation between Bel Fuse and OSI Systems

Assuming the 90 days horizon Bel Fuse B is expected to generate 1.55 times more return on investment than OSI Systems. However, Bel Fuse is 1.55 times more volatile than OSI Systems. It trades about 0.34 of its potential returns per unit of risk. OSI Systems is currently generating about 0.01 per unit of risk. If you would invest  6,891  in Bel Fuse B on May 5, 2025 and sell it today you would earn a total of  5,859  from holding Bel Fuse B or generate 85.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Bel Fuse B  vs.  OSI Systems

 Performance 
       Timeline  
Bel Fuse B 

Risk-Adjusted Performance

Strong

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Bel Fuse B are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Bel Fuse sustained solid returns over the last few months and may actually be approaching a breakup point.
OSI Systems 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days OSI Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, OSI Systems is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Bel Fuse and OSI Systems Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bel Fuse and OSI Systems

The main advantage of trading using opposite Bel Fuse and OSI Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse 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 Bel Fuse B 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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