Correlation Between Newgen Software and Cantabil Retail

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

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

Diversification Opportunities for Newgen Software and Cantabil Retail

0.87

Correlation Coefficient

Newgen Software  Cantabil Retail

Very poor diversification

The 3 months correlation between Newgen and Cantabil is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Newgen Software Technologies and Cantabil Retail India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantabil Retail India and Newgen Software 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 Newgen Software Technologies are associated (or correlated) with Cantabil Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantabil Retail India has no effect on the direction of Newgen Software i.e., Newgen Software and Cantabil Retail go up and down completely randomly.

Pair Corralation between Newgen Software and Cantabil Retail

Assuming the 90 days trading horizon Newgen Software Technologies is expected to generate 1.49 times more return on investment than Cantabil Retail. However, Newgen Software is 1.49 times more volatile than Cantabil Retail India. It trades about 0.16 of its potential returns per unit of risk. Cantabil Retail India is currently generating about 0.18 per unit of risk. If you would invest  125,640  in Newgen Software Technologies on October 5, 2024 and sell it today you would earn a total of  46,240  from holding Newgen Software Technologies or generate 36.8% return on investment over 90 days.

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

Newgen Software Technologies  vs.  Cantabil Retail India

Newgen Software Tech

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Newgen Software Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Newgen Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Cantabil Retail India

Risk-Adjusted Performance

14 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cantabil Retail India are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental drivers, Cantabil Retail demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Newgen Software and Cantabil Retail

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

The idea behind Newgen Software Technologies and Cantabil Retail India 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.