Correlation Between Newgen Software and Dev Information

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Can any of the company-specific risk be diversified away by investing in both Newgen Software and Dev Information 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 Dev Information 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 Dev Information Technology, you can compare the effects of market volatilities on Newgen Software and Dev Information 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 Dev Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newgen Software and Dev Information.

Diversification Opportunities for Newgen Software and Dev Information

NewgenDevDiversified AwayNewgenDevDiversified Away100%
0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Newgen and Dev is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Newgen Software Technologies and Dev Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dev Information Tech 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 Dev Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dev Information Tech has no effect on the direction of Newgen Software i.e., Newgen Software and Dev Information go up and down completely randomly.

Pair Corralation between Newgen Software and Dev Information

Assuming the 90 days trading horizon Newgen Software Technologies is expected to generate 1.24 times more return on investment than Dev Information. However, Newgen Software is 1.24 times more volatile than Dev Information Technology. It trades about -0.01 of its potential returns per unit of risk. Dev Information Technology is currently generating about -0.1 per unit of risk. If you would invest  104,435  in Newgen Software Technologies on November 18, 2024 and sell it today you would lose (8,480) from holding Newgen Software Technologies or give up 8.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Newgen Software Technologies  vs.  Dev Information Technology

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-100102030
JavaScript chart by amCharts 3.21.15NEWGEN DEVIT
       Timeline  
Newgen Software Tech 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Newgen Software Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Newgen Software is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1,0001,1001,2001,3001,4001,5001,6001,7001,800
Dev Information Tech 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Dev Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb120130140150160170180190

Newgen Software and Dev Information Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.75-5.8-3.86-1.91-0.03241.793.615.437.25 0.0160.0180.0200.0220.0240.0260.028
JavaScript chart by amCharts 3.21.15NEWGEN DEVIT
       Returns  

Pair Trading with Newgen Software and Dev Information

The main advantage of trading using opposite Newgen Software and Dev Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newgen Software position performs unexpectedly, Dev Information 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 Dev Information will offset losses from the drop in Dev Information's long position.
The idea behind Newgen Software Technologies and Dev Information Technology 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.
Check out your portfolio center.
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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