Correlation Between LLOYDS METALS and Newgen Software

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

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

Diversification Opportunities for LLOYDS METALS and Newgen Software

0.66

Correlation Coefficient

LLOYDS METALS  Newgen Software

Poor diversification

The 3 months correlation between LLOYDS and Newgen is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding LLOYDS METALS AND 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 LLOYDS METALS 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 LLOYDS METALS AND 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 LLOYDS METALS i.e., LLOYDS METALS and Newgen Software go up and down completely randomly.

Pair Corralation between LLOYDS METALS and Newgen Software

Assuming the 90 days trading horizon LLOYDS METALS AND is expected to generate 0.84 times more return on investment than Newgen Software. However, LLOYDS METALS AND is 1.19 times less risky than Newgen Software. It trades about 0.06 of its potential returns per unit of risk. Newgen Software Technologies is currently generating about -0.19 per unit of risk. If you would invest  116,730  in LLOYDS METALS AND on December 26, 2024 and sell it today you would earn a total of  11,190  from holding LLOYDS METALS AND or generate 9.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

LLOYDS METALS AND  vs.  Newgen Software Technologies

LLOYDS METALS AND

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LLOYDS METALS AND are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, LLOYDS METALS displayed solid returns over the last few months and may actually be approaching a breakup point.

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 weak 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 LLOYDS METALS and Newgen Software

The main advantage of trading using opposite LLOYDS METALS and Newgen Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LLOYDS METALS 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 LLOYDS METALS AND 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.