Correlation Between Mcleod Russel and Newgen Software

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Can any of the company-specific risk be diversified away by investing in both Mcleod Russel 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 Mcleod Russel and Newgen Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mcleod Russel India and Newgen Software Technologies, you can compare the effects of market volatilities on Mcleod Russel 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 Mcleod Russel with a short position of Newgen Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mcleod Russel and Newgen Software.

Diversification Opportunities for Mcleod Russel and Newgen Software

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Mcleod and Newgen is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Mcleod Russel 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 Mcleod Russel 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 Mcleod Russel 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 Mcleod Russel i.e., Mcleod Russel and Newgen Software go up and down completely randomly.

Pair Corralation between Mcleod Russel and Newgen Software

Assuming the 90 days trading horizon Mcleod Russel India is expected to under-perform the Newgen Software. In addition to that, Mcleod Russel is 1.57 times more volatile than Newgen Software Technologies. It trades about -0.16 of its total potential returns per unit of risk. Newgen Software Technologies is currently generating about 0.3 per unit of volatility. If you would invest  142,915  in Newgen Software Technologies on October 8, 2024 and sell it today you would earn a total of  21,485  from holding Newgen Software Technologies or generate 15.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Mcleod Russel India  vs.  Newgen Software Technologies

 Performance 
       Timeline  
Mcleod Russel India 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Mcleod Russel India are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Mcleod Russel reported solid returns over the last few months and may actually be approaching a breakup point.
Newgen Software Tech 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Newgen Software Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Newgen Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Mcleod Russel and Newgen Software Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mcleod Russel and Newgen Software

The main advantage of trading using opposite Mcleod Russel and Newgen Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mcleod Russel 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 Mcleod Russel 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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