Correlation Between Sanmina and OSI Systems

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

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

Diversification Opportunities for Sanmina and OSI Systems

0.7

Correlation Coefficient

Sanmina  OSI Systems

Poor diversification

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

Pair Corralation between Sanmina and OSI Systems

Given the investment horizon of 90 days Sanmina is expected to generate 1.43 times less return on investment than OSI Systems. But when comparing it to its historical volatility, Sanmina is 1.06 times less risky than OSI Systems. It trades about 0.28 of its potential returns per unit of risk. OSI Systems is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  17,446  in OSI Systems on February 3, 2025 and sell it today you would earn a total of  5,040  from holding OSI Systems or generate 28.89% return on investment over 90 days.

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

Sanmina  vs.  OSI Systems

Sanmina

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sanmina has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Sanmina is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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 unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sanmina and OSI Systems

The main advantage of trading using opposite Sanmina and OSI Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanmina 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 Sanmina 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.