Correlation Between Oxford Lane and New Germany

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

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

Diversification Opportunities for Oxford Lane and New Germany

-0.5

Correlation Coefficient

Oxford Lane  New Germany

Very good diversification

The 3 months correlation between Oxford and New is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and New Germany Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Germany Closed and Oxford Lane 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 Oxford Lane Capital are associated (or correlated) with New Germany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Germany Closed has no effect on the direction of Oxford Lane i.e., Oxford Lane and New Germany go up and down completely randomly.

Pair Corralation between Oxford Lane and New Germany

Given the investment horizon of 90 days Oxford Lane Capital is expected to under-perform the New Germany. In addition to that, Oxford Lane is 1.06 times more volatile than New Germany Closed. It trades about -0.04 of its total potential returns per unit of risk. New Germany Closed is currently generating about 0.33 per unit of volatility. If you would invest  795.00  in New Germany Closed on December 26, 2024 and sell it today you would earn a total of  237.00  from holding New Germany Closed or generate 29.81% return on investment over 90 days.

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

Oxford Lane Capital  vs.  New Germany Closed

Oxford Lane Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oxford Lane Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Oxford Lane is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

New Germany Closed

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in New Germany Closed are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly uncertain technical and fundamental indicators, New Germany reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oxford Lane and New Germany

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

The idea behind Oxford Lane Capital and New Germany Closed 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.