Correlation Between LSI Industries and OSI Systems

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

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

Diversification Opportunities for LSI Industries and OSI Systems

0.09

Correlation Coefficient

LSI Industries  OSI Systems

Significant diversification

The 3 months correlation between LSI and OSI is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding LSI Industries and OSI Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSI Systems and LSI Industries 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 LSI Industries 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 LSI Industries i.e., LSI Industries and OSI Systems go up and down completely randomly.

Pair Corralation between LSI Industries and OSI Systems

Given the investment horizon of 90 days LSI Industries is expected to generate 4.78 times less return on investment than OSI Systems. In addition to that, LSI Industries is 1.03 times more volatile than OSI Systems. It trades about 0.08 of its total potential returns per unit of risk. OSI Systems is currently generating about 0.38 per unit of volatility. If you would invest  18,935  in OSI Systems on February 15, 2025 and sell it today you would earn a total of  4,265  from holding OSI Systems or generate 22.52% return on investment over 90 days.

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

LSI Industries  vs.  OSI Systems

LSI Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days LSI Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

OSI Systems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OSI Systems are ranked lower than 3 (%) 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 June 2025.

Pair Trading with LSI Industries and OSI Systems

The main advantage of trading using opposite LSI Industries and OSI Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LSI Industries 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 LSI Industries 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.