Correlation Between CHS and Oxford Lane

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

By analyzing existing cross correlation between CHS Inc CM and Oxford Lane Capital, you can compare the effects of market volatilities on CHS and Oxford Lane 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 CHS with a short position of Oxford Lane. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHS and Oxford Lane.

Diversification Opportunities for CHS and Oxford Lane

-0.37

Correlation Coefficient

CHS  Oxford Lane

Very good diversification

The 3 months correlation between CHS and Oxford is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding CHS Inc CM and Oxford Lane Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Lane Capital and CHS 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 CHS Inc CM are associated (or correlated) with Oxford Lane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Lane Capital has no effect on the direction of CHS i.e., CHS and Oxford Lane go up and down completely randomly.

Pair Corralation between CHS and Oxford Lane

Assuming the 90 days horizon CHS is expected to generate 1.51 times less return on investment than Oxford Lane. But when comparing it to its historical volatility, CHS Inc CM is 1.21 times less risky than Oxford Lane. It trades about 0.06 of its potential returns per unit of risk. Oxford Lane Capital is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,929  in Oxford Lane Capital on September 24, 2024 and sell it today you would earn a total of  473.10  from holding Oxford Lane Capital or generate 24.53% return on investment over 90 days.

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

CHS Inc CM  vs.  Oxford Lane Capital

CHS Inc CM

Risk-Adjusted Performance

0 of 100

Very Weak

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

Oxford Lane Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Lane Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Oxford Lane is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CHS and Oxford Lane

The main advantage of trading using opposite CHS and Oxford Lane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHS position performs unexpectedly, Oxford Lane 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 Oxford Lane will offset losses from the drop in Oxford Lane's long position.

The idea behind CHS Inc CM and Oxford Lane Capital 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.