Correlation Between Digi International and OSI Systems

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

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

Diversification Opportunities for Digi International and OSI Systems

0.7

Correlation Coefficient

Digi International  OSI Systems

Poor diversification

The 3 months correlation between Digi and OSI is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and OSI Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSI Systems and Digi International 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 Digi International 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 Digi International i.e., Digi International and OSI Systems go up and down completely randomly.

Pair Corralation between Digi International and OSI Systems

Given the investment horizon of 90 days Digi International is expected to generate 1.0 times more return on investment than OSI Systems. However, Digi International is 1.0 times less risky than OSI Systems. It trades about 0.14 of its potential returns per unit of risk. OSI Systems is currently generating about 0.08 per unit of risk. If you would invest  2,771  in Digi International on April 26, 2025 and sell it today you would earn a total of  554.00  from holding Digi International or generate 19.99% return on investment over 90 days.

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

Digi International  vs.  OSI Systems

Digi International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Digi International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

OSI Systems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OSI Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward indicators, OSI Systems may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Digi International and OSI Systems

The main advantage of trading using opposite Digi International and OSI Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International 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 Digi International 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 Transaction History module to view history of all your transactions and understand their impact on performance.