Correlation Between Oxford Lane and CHS

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

Diversification Opportunities for Oxford Lane and CHS

-0.37

Correlation Coefficient

Oxford Lane  CHS

Very good diversification

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

Pair Corralation between Oxford Lane and CHS

Assuming the 90 days horizon Oxford Lane Capital is expected to generate 1.21 times more return on investment than CHS. However, Oxford Lane is 1.21 times more volatile than CHS Inc CM. It trades about 0.07 of its potential returns per unit of risk. CHS Inc CM is currently generating about 0.06 per unit of risk. 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

Oxford Lane Capital  vs.  CHS Inc CM

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.

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.

Pair Trading with Oxford Lane and CHS

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

The idea behind Oxford Lane Capital and CHS Inc CM 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.