Correlation Between Oxford Lane and Sparta Capital

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

Diversification Opportunities for Oxford Lane and Sparta Capital

-0.75

Correlation Coefficient

Oxford Lane  Sparta Capital

Pay attention - limited upside

The 3 months correlation between Oxford and Sparta is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital 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 Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of Oxford Lane i.e., Oxford Lane and Sparta Capital go up and down completely randomly.

Pair Corralation between Oxford Lane and Sparta Capital

Assuming the 90 days horizon Oxford Lane is expected to generate 11.38 times less return on investment than Sparta Capital. But when comparing it to its historical volatility, Oxford Lane Capital is 23.77 times less risky than Sparta Capital. It trades about 0.07 of its potential returns per unit of risk. Sparta Capital is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1.10  in Sparta Capital on October 9, 2024 and sell it today you would lose (0.07) from holding Sparta Capital or give up 6.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Oxford Lane Capital  vs.  Sparta Capital

Oxford Lane Capital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Lane Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Oxford Lane is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Sparta Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparta Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Oxford Lane and Sparta Capital

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

The idea behind Oxford Lane Capital and Sparta 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.