Correlation Between Stellus Capital and Oxford Lane

Can any of the company-specific risk be diversified away by investing in both Stellus Capital and Oxford Lane 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 Stellus Capital and Oxford Lane into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Stellus Capital Investment and Oxford Lane Capital, you can compare the effects of market volatilities on Stellus Capital and Oxford Lane 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 Stellus Capital with a short position of Oxford Lane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellus Capital and Oxford Lane.

Diversification Opportunities for Stellus Capital and Oxford Lane

0.13

Correlation Coefficient

Stellus Capital  Oxford Lane

Average diversification

The 3 months correlation between Stellus and Oxford is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Stellus Capital Investment and Oxford Lane Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Lane Capital and Stellus Capital 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 Stellus Capital Investment are associated (or correlated) with Oxford Lane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Lane Capital has no effect on the direction of Stellus Capital i.e., Stellus Capital and Oxford Lane go up and down completely randomly.

Pair Corralation between Stellus Capital and Oxford Lane

Considering the 90-day investment horizon Stellus Capital is expected to generate 1.4 times less return on investment than Oxford Lane. But when comparing it to its historical volatility, Stellus Capital Investment is 1.01 times less risky than Oxford Lane. It trades about 0.05 of its potential returns per unit of risk. Oxford Lane Capital is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  358.00  in Oxford Lane Capital on September 26, 2024 and sell it today you would earn a total of  158.00  from holding Oxford Lane Capital or generate 44.13% return on investment over 90 days.

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

Stellus Capital Investment  vs.  Oxford Lane Capital

Stellus Capital Inve

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stellus Capital Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Stellus Capital is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Stellus Capital and Oxford Lane

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

The idea behind Stellus Capital Investment and Oxford Lane 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.