Correlation Between Oxford Lane and XAI Octagon

Can any of the company-specific risk be diversified away by investing in both Oxford Lane and XAI Octagon 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 XAI Octagon 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 XAI Octagon Floating, you can compare the effects of market volatilities on Oxford Lane and XAI Octagon 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 XAI Octagon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Lane and XAI Octagon.

Diversification Opportunities for Oxford Lane and XAI Octagon

0.87

Correlation Coefficient

Oxford Lane  XAI Octagon

Very poor diversification

The 3 months correlation between Oxford and XAI is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and XAI Octagon Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAI Octagon Floating 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 XAI Octagon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAI Octagon Floating has no effect on the direction of Oxford Lane i.e., Oxford Lane and XAI Octagon go up and down completely randomly.

Pair Corralation between Oxford Lane and XAI Octagon

Given the investment horizon of 90 days Oxford Lane is expected to generate 1.52 times less return on investment than XAI Octagon. In addition to that, Oxford Lane is 1.79 times more volatile than XAI Octagon Floating. It trades about 0.11 of its total potential returns per unit of risk. XAI Octagon Floating is currently generating about 0.3 per unit of volatility. If you would invest  664.00  in XAI Octagon Floating on September 3, 2024 and sell it today you would earn a total of  41.00  from holding XAI Octagon Floating or generate 6.17% return on investment over 90 days.

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

Oxford Lane Capital  vs.  XAI Octagon Floating

Oxford Lane Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Lane Capital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. 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.

XAI Octagon Floating

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in XAI Octagon Floating are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, XAI Octagon is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Oxford Lane and XAI Octagon

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

The idea behind Oxford Lane Capital and XAI Octagon Floating 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.