Correlation Between Oxford Lane and Ameritrans Capital

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

Diversification Opportunities for Oxford Lane and Ameritrans Capital

0.04

Correlation Coefficient

Oxford Lane  Ameritrans Capital

Significant diversification

The 3 months correlation between Oxford and Ameritrans is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and Ameritrans Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameritrans Capital Corp 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 Ameritrans Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameritrans Capital Corp has no effect on the direction of Oxford Lane i.e., Oxford Lane and Ameritrans Capital go up and down completely randomly.

Pair Corralation between Oxford Lane and Ameritrans Capital

Assuming the 90 days horizon Oxford Lane Capital is expected to generate 0.37 times more return on investment than Ameritrans Capital. However, Oxford Lane Capital is 2.7 times less risky than Ameritrans Capital. It trades about 0.03 of its potential returns per unit of risk. Ameritrans Capital Corp is currently generating about -0.04 per unit of risk. If you would invest  1,881  in Oxford Lane Capital on October 22, 2024 and sell it today you would earn a total of  404.00  from holding Oxford Lane Capital or generate 21.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.99%
Values	Daily Returns

Oxford Lane Capital  vs.  Ameritrans Capital Corp

Oxford Lane Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Lane Capital are ranked lower than 3 (%) 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.

Ameritrans Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ameritrans Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Preferred Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Oxford Lane and Ameritrans Capital

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

The idea behind Oxford Lane Capital and Ameritrans Capital Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.