Correlation Between Kohinoor Foods and Newgen Software

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

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

Diversification Opportunities for Kohinoor Foods and Newgen Software

0.84

Correlation Coefficient

Kohinoor Foods  Newgen Software

Very poor diversification

The 3 months correlation between Kohinoor and Newgen is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kohinoor Foods Limited 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 Kohinoor Foods 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 Kohinoor Foods Limited 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 Kohinoor Foods i.e., Kohinoor Foods and Newgen Software go up and down completely randomly.

Pair Corralation between Kohinoor Foods and Newgen Software

Assuming the 90 days trading horizon Kohinoor Foods Limited is expected to generate 0.77 times more return on investment than Newgen Software. However, Kohinoor Foods Limited is 1.3 times less risky than Newgen Software. It trades about -0.15 of its potential returns per unit of risk. Newgen Software Technologies is currently generating about -0.18 per unit of risk. If you would invest  4,291  in Kohinoor Foods Limited on December 28, 2024 and sell it today you would lose (1,223) from holding Kohinoor Foods Limited or give up 28.5% of portfolio value over 90 days.

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

Kohinoor Foods Limited  vs.  Newgen Software Technologies

Kohinoor Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kohinoor Foods Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm 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 Kohinoor Foods and Newgen Software

The main advantage of trading using opposite Kohinoor Foods and Newgen Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kohinoor Foods 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 Kohinoor Foods Limited 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.