Correlation Between Kaynes Technology and Newgen Software

Can any of the company-specific risk be diversified away by investing in both Kaynes Technology and Newgen Software 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 Kaynes Technology and Newgen Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kaynes Technology India and Newgen Software Technologies, you can compare the effects of market volatilities on Kaynes Technology and Newgen Software 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 Kaynes Technology with a short position of Newgen Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaynes Technology and Newgen Software.

Diversification Opportunities for Kaynes Technology and Newgen Software

0.96

Correlation Coefficient

Kaynes Technology  Newgen Software

Almost no diversification

The 3 months correlation between Kaynes and Newgen is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Kaynes Technology India and Newgen Software Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newgen Software Tech and Kaynes Technology 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 Kaynes Technology India are associated (or correlated) with Newgen Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newgen Software Tech has no effect on the direction of Kaynes Technology i.e., Kaynes Technology and Newgen Software go up and down completely randomly.

Pair Corralation between Kaynes Technology and Newgen Software

Assuming the 90 days trading horizon Kaynes Technology India is expected to generate 0.92 times more return on investment than Newgen Software. However, Kaynes Technology India is 1.09 times less risky than Newgen Software. It trades about -0.12 of its potential returns per unit of risk. Newgen Software Technologies is currently generating about -0.17 per unit of risk. If you would invest  706,295  in Kaynes Technology India on December 25, 2024 and sell it today you would lose (202,655) from holding Kaynes Technology India or give up 28.69% of portfolio value over 90 days.

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

Kaynes Technology India  vs.  Newgen Software Technologies

Kaynes Technology India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kaynes Technology India has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Newgen Software Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Newgen Software Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kaynes Technology and Newgen Software

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

The idea behind Kaynes Technology India and Newgen Software Technologies 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.