Correlation Between Oxford Lane and Oxford Square

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

Diversification Opportunities for Oxford Lane and Oxford Square

0.56

Correlation Coefficient

Oxford Lane  Oxford Square

Very weak diversification

The 3 months correlation between Oxford and Oxford is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and Oxford Square Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Square 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 Oxford Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Square Capital has no effect on the direction of Oxford Lane i.e., Oxford Lane and Oxford Square go up and down completely randomly.

Pair Corralation between Oxford Lane and Oxford Square

Assuming the 90 days horizon Oxford Lane Capital is expected to generate 0.51 times more return on investment than Oxford Square. However, Oxford Lane Capital is 1.94 times less risky than Oxford Square. It trades about 0.18 of its potential returns per unit of risk. Oxford Square Capital is currently generating about -0.02 per unit of risk. If you would invest  2,346  in Oxford Lane Capital on September 24, 2024 and sell it today you would earn a total of  18.00  from holding Oxford Lane Capital or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Oxford Lane Capital  vs.  Oxford Square Capital

Oxford Lane Capital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Lane Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Oxford Lane is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Oxford Square Capital

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Square Capital are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Oxford Square is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Oxford Lane and Oxford Square

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

The idea behind Oxford Lane Capital and Oxford Square 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.