Correlation Between CTS and OSI Systems

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

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

Diversification Opportunities for CTS and OSI Systems

0.51

Correlation Coefficient

CTS  OSI Systems

Very weak diversification

The 3 months correlation between CTS and OSI is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CTS Corp. and OSI Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSI Systems and CTS 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 CTS Corporation 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 CTS i.e., CTS and OSI Systems go up and down completely randomly.

Pair Corralation between CTS and OSI Systems

Considering the 90-day investment horizon CTS Corporation is expected to generate 0.92 times more return on investment than OSI Systems. However, CTS Corporation is 1.09 times less risky than OSI Systems. It trades about 0.02 of its potential returns per unit of risk. OSI Systems is currently generating about 0.01 per unit of risk. If you would invest  3,977  in CTS Corporation on May 2, 2025 and sell it today you would earn a total of  70.00  from holding CTS Corporation or generate 1.76% return on investment over 90 days.

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

CTS Corp.  vs.  OSI Systems

CTS Corporation

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CTS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

OSI Systems

Risk-Adjusted Performance

Very Weak

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.

Pair Trading with CTS and OSI Systems

The main advantage of trading using opposite CTS and OSI Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTS 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 CTS Corporation 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.